Gekara

Globalisation, State Strategies and the Shipping
Labour Market
The UK’s Response to Declining Seafaring Skills.
Victor Oyaro Gekara
School of Social Sciences

Cardiff University
This thesis is submitted to Cardiff University in fulfilment of the requirements for the
Degree of Doctor of Philosophy
January 2008
ii
Declaration
This work has not previously been accepted in substance for any degree and is not concurrently
submitted in candidature for any degree.
Signed …………………………………………………………. (Candidate)
Date …………………………
STATEMENT 1
This thesis is being submitted in partial fulfilment of the requirements for the degree of PhD as
appropriate)
Date …………………………
STATEMENT 2
This thesis is the result of my own independent work/investigation, except where otherwise stated.
Other sources are acknowledged by explicit references. A bibliography is appended.
Date …………………………
STATEMENT 3
I hereby give consent for my thesis, if accepted, to be available for photocopying and for inter-library
loan, and for the title and summary to be made available to outside organisations.
Date …………………………
iii
Acknowledgements
The successful completio n of this thesis could not have been possible without the assistance
and generous support of many people in many organisations around the country many of
whom, for ethical reasons, I cannot name here. I am nevertheless deeply grateful for their
support. I would, however, like to specifically express my gratitude to the Nippon
Foundation for their generous sponsorship which made the study possible. I would like to
thank all the managers of the various shipping companies, government officials, training
managers and administrators, in cadet colleges and training agencies, union officials and
cadets, who spared valuable time to participate in the study and provide useful and valuable
information. Special gratitude also goes to my family, especially my brother Msafiri and my
wife Nachimera for their love, care and patient support. My network of friends, both in the
UK and in Kenya have stood by me throughout and provided the emotional support and
encouragement which has seen me through all the ‘highs’ and ‘lows’ and I would like to
thank all of them. My special recognition and gratitude also goes to the Cardiff SOCSI and
the entire ‘machinery’ of academic, administrative and technical support, especially Liz
Renton and the very capable, helpful and friendly RGS team.
I reserve my most special thanks to my supervisors, Professors Helen Sampson and Peter
Fairbrother who have patiently worked with me, guided me and encouraged me at all times.
Their confidence in my ability to succeed, even when mine was wavering, kept me going.
Their help is indeed invaluable. I can only hope that they derive some gratification in the
substance of the final product. Thank You!
Victor Oyaro Gekara, 2007

iv
Abstract:
The acceleration of economic globalisation, over the past few decades, has put the role of
the state, as an important actor in the management of the global economy, in the spotlight.
The question that continues to dominate the globalisation debate is whether or not
individual states, operating within a neoliberal paradigm, are in a position to effectively
regulate the economic activities of powerful multinational capital, manage domestic
economies and protect labour. The main aim of this thesis is to assess how effectively
nation states can respond to globalisation and mitigate negative impacts such as the decline
of domestic industries and local labour markets while maximising the benefits.
Shipping is one of the most globalised industries and one where capital is highly mobile.
The challenges facing nation states in their attempt to manage domestic economies and
protect local industries are therefore well illustrated in the relationship between the state and
multinational shipping capital. The UK, along with other Traditional Maritime Nations, has
been dramatically affected by the globalisation of the industry. Following a huge decline in
the UK’s merchant shipping fleet, the UK government has attempted to respond, by way of
a tonnage tax. This is primarily a tax incentive to encourage ship-owners to register and
operate their ships in the UK. The tonnage tax regime contains within it a training
commitment by which the ship-owners undertake to recruit and train UK cadets.
An assessment of the performance of the strategy reveals that, whereas it has boosted
significant growth in UK registered tonnage, it has achieved little success with regard to
increasing the number of qualified junior officers. It is this paradox that comprises the focus
of this study. Using interview data collected from key stakeholders in the UK shipping
industry the thesis analyses the form and impact of the tonnage tax. The main conclusion is
that, having initially committed to the advocacy of the neoliberal agenda and the concept of
free capital markets, states are no longer capable of effe ctively responding to globalisation
and the consequent negative impact on domestic economies. Because of the growing
influence of corporate capital and the fear of capital flight, the limitations of state policies is
especially evident in the British shipping industry in relation to the decline of local
seafaring labour.
v
Table of Contents
DECLARATION................................................................................................................................................................ II
ACKNOWLEDGEMENTS ........................................................................................................................................... III
ABSTRACT:.......................................................................................................................................................................IV
TABLE OF CONTENTS ................................................................................................................................................. V
LIST OF FIGURES ...................................................................................................................................................... VIII
GLOSSARY OF ABBREVIATIONS ..........................................................................................................................IX
CHAPTER ONE............................................................................................................................................................. - 1 -
INTRODUCTION .................................................................................................................................................... - 1 -
1.1 Thesis................................................................................................................................................................. - 1 -
1.2 Aims and Research Questions....................................................................................................................... - 7 -
1.3 Thesis Structure.............................................................................................................................................- 11 -
CHAPTER TWO..........................................................................................................................................................- 14 -
GLOBALISATION AND SHIPPING ......................................................................................................................- 14 -

Introduction..........................................................................................................................................................- 14 -
2.1 The Nature of Shipping................................................................................................................................- 16 -
2.2 What is Globalisation?.................................................................................................................................- 20 -
2.2.1 Globalisation in Historical Context ...........................................................................................................- 22 -
2.2.2 Nation States in Modern-day Globalisation ..............................................................................................- 25 -
2.3 Globalisation in the Context of Shipping..................................................................................................- 28 -
2.4 States, Markets and Labour in a Globalised Economy ..........................................................................- 32 -
2.4.1 Neoliberalism, States and Capital..............................................................................................................- 33 -
2.4.2 Neoliberalism, States and Labour..............................................................................................................- 36 -
2.5. Conclusion.....................................................................................................................................................- 41 -
CHAPTER THREE.....................................................................................................................................................- 43 -
THE UK TONNAGE TAX: A STATE SOLUTION TO INDUSTRY PROBLEMS..................................................- 43 -

Introduction..........................................................................................................................................................- 43 -
3.1 Globalisation and Deregulation in the Shipping Industry.....................................................................- 44 -
3.1.1 States and Shipping....................................................................................................................................- 46 -
3.1.2 20th Century Open Registers......................................................................................................................- 49 -
3.1.3 The Deregulatory Impact of Open Registers.............................................................................................- 55 -
3.2 Decline in the UK Shipping Industry.........................................................................................................- 57 -
3.2.1 Impact on British Maritime Skills .............................................................................................................- 58 -
3.3 The Tonnage Tax Strategy...........................................................................................................................- 60 -
3.3.1 The EU Tonnage Tax.................................................................................................................................- 61 -
3.3.2 Towards a New Strategy for UK Shipping................................................................................................- 62 -
vi
3.3.3 The Design of the UK Tonnage Tax..........................................................................................................- 63 -

3.3.3 Entry into the Tonnage Tax System ..........................................................................................................- 66 -
3.4 The Performance of the Tonnage Tax to Date.........................................................................................- 67 -
3.5 Conclusion......................................................................................................................................................- 68 -
CHAPTER FOUR ........................................................................................................................................................- 70 -
M ETHODS AND M ETHODOLOGY ......................................................................................................................- 70 -

Introduction..........................................................................................................................................................- 70 -
4.1 My Trajectory in relation to Social Science Research............................................................................- 71 -
4.2 The Research Process ..................................................................................................................................- 74 -
4.3 Data Sources..................................................................................................................................................- 79 -
4.4 Data Analysis.................................................................................................................................................- 87 -
4.5 Challenges, Limitations and Ethical Considerations.............................................................................- 89 -
4.6 Summary: Methods and Questions.............................................................................................................- 92 -
CHAPTER FIVE..........................................................................................................................................................- 95 -
STATE STRATEGIES ...........................................................................................................................................- 95 -

Introduction..........................................................................................................................................................- 95 -
5.1 Globalisation and the Decline in shipping Labour.................................................................................- 98 -
5.2 The Case for Government Policy .............................................................................................................- 102 -
5.3 The Problem.................................................................................................................................................- 108 -
5.4 Designing an Approach..............................................................................................................................- 112 -
5.5 Conflicting Interests....................................................................................................................................- 114 -
5.6 The Strategy.................................................................................................................................................- 116 -
5.7 Assessment....................................................................................................................................................- 120 -
CHAPTER SIX ...........................................................................................................................................................- 123 -
THE COMPANY APPROACH ............................................................................................................................- 123 -

Introduction........................................................................................................................................................- 123 -
6.1 The Industry View of the Tonnage Tax....................................................................................................- 124 -
6.2 Understanding Company Recruitment Strategies.................................................................................- 129 -
6.2.1 Cost..........................................................................................................................................................- 130 -
6.2.2 Quality, Safety and Environmental Considerations.................................................................................- 138 -
6.2.3 Reliability of Supply................................................................................................................................- 142 -
6.3 Companies’ Commitment to Training.....................................................................................................- 144 -
6.4 Implications..................................................................................................................................................- 148 -
CHAPTER SEVEN....................................................................................................................................................- 151 -
CADET TRAINING IN THE UK.........................................................................................................................- 151 -

Introduction........................................................................................................................................................- 151 -
7.1 Cadet Selection and Allocation.................................................................................................................- 153 -
7.2 Training Colleges and Cadet Schemes....................................................................................................- 157 -
vii
7.3 Cadet Selection and Training....................................................................................................................- 161 -

7.3.1 The Corporate Perspective.......................................................................................................................- 161 -
7.3.2 The Training Colleges Perspective..........................................................................................................- 167 -
7.4 The Cadet Perspective: Training Experiences and Implications for Training.................................- 171 -
7.4.1 Cadet Training Experiences at College ...................................................................................................- 172 -
7.5.2 Cadet experiences at Sea .........................................................................................................................- 174 -
7.4.3 Employment Prospects............................................................................................................................- 182 -
7.5 Structural Failures......................................................................................................................................- 187 -
7.6 Assessment....................................................................................................................................................- 190 -
CHAPTER EIGHT ....................................................................................................................................................- 192 -
A SSESSMENT ; LIMITATIONS TO THE TONNAGE TAX RESPONSE...............................................................- 192 -

Introduction........................................................................................................................................................- 192 -
8.1 Government Responses to the Globalisation of Shipping ....................................................................- 197 -
8.2 What Shaped the Government Response?...............................................................................................- 201 -
8.3 The Effectiveness of the Response............................................................................................................- 207 -
8.4 Possibilities of a more Effective Response. ............................................................................................- 209 -
CHAPTER NINE .......................................................................................................................................................- 215 -
CONCLUSIONS ..................................................................................................................................................- 215 -

9.1 Ambiguities and Complexities in the State’s Neoliberal Commitment ..............................................- 217 -
9.2 The Research Process: Deficiencies and Mitigation ............................................................................- 220 -
9.3 Future Research Agenda............................................................................................................................- 222 -
BIBLIOGRAPHY ......................................................................................................................................................- 224 -
APPENDICES .............................................................................................................................................................- 239 -
A PPENDIX ONE: RESEARCH A CCESS LETTER..............................................................................................- 239 -

A PPENDIX TWO: RESEARCH PARTICIPANT INFORMATION FORM.............................................................- 240 -
A PPENDIX THREE : RESEARCH INFORMED CONSENT FORM ......................................................................- 241 -
A PPENDIX FOUR: ETHICS COMMITTEE APPROVAL LETTER......................................................................- 242 -
A PPENDIX FIVE : INTERVIEW GUIDES ...........................................................................................................- 243 -
A PPENDIX SIX: CADET TRAINING COURSE OUTLINES...............................................................................- 248 -
viii
List of Figures
Figure 1: Ship registration trends; top six OR Nations and TMNs.............................. - 4 -
Figure 2: World Fleet Distribution between Developed and Developing Economies 1980 –
2005.............................................................................................................................. - 5 -
Figure 3: The Santos Sunset ...................................................................................... - 17 -
Figure 4: World Fleet by Ownership ......................................................................... - 18 -
Figure 5: World-Wide Supply of Seafarers by Region.............................................. - 19 -
Figure 7: Top Seven Open Registers 1948 – 2000 .................................................... - 54 -
Figure 8: UK Gross Registered Tonnage 1970 - 1999 .............................................. - 58 -
Figure 10: UK Cadet Recruitment 1970 - 1997......................................................... - 60 -
Fig. 11: The Adoption of Tonnage Tax in the EU..................................................... - 62 -
Figure 12: Summary of Company Features ............................................................... - 82 -
Fig. 13: UK Registered Tonnage 2000 - 2006 ......................................................... - 120 -
Fig. 14: Cadet Intake and Training Levels 1999 - 2006 .......................................... - 121 -
Fig. 15: Total Number of UK Officers 2000 - 2006 ................................................ - 122 -
Fig. 16: Annual Operating Cost Figures for three Different Ship-types.................. - 131 -
ix
Glossary of Abbreviations
B. Sc : Bachelor of Science
BIFU : Banking, Insurance and Finance Union
BIMCO : Baltic and International Maritime Council
BSA : British Sociological Association
CBT : Computer Based Training
CTC : Core Training Commitment
DETR : Department of Environment, Transport and the Regions
DfT : Department of Transport
DIS : The Danish International Register of Shipping
DWT : Deadweight Tonnage
EC : European Commission
EPA : End of Period Adjustment
EU : European Union
FD : Foundation Diploma
FDI : Foreign Direct Investment
FoC : Flag of Convenience
GCSE : General Certificate of Secondary Education
GIS : The German International Register of Shipping
GRT : Gross Registered Tonnage
GT : Gross Tonnage
x
HMSO : Her Majesty’s Stationery Office
HND : Higher National Diploma
HOC : House of Commons
HRM : Human Resource Manager
IMO : International Maritime Organisation
ITF : International Transport Workers Federation
ISF : International Shipping Federation
ISL : The Institute of Shipping Economics and Logistics
ISM : International Safety Management
LNG : Liquefied Natural Gas
LPG : Liquefied Petroleum Gas
MARPOL : Marine Pollution
MCA : Maritime and Coastguard Agency
MNC : Multinational Corporation
MNTB : Merchant Navy Training Board
MTT : Maritime Training Trust
MTO : Minimum Training Obligation
NAPSA : National and Provincial Building Society Staff Association
NF : Nautilus Federation
NIS : Norwegian International Register of Shipping
NMN : New Maritime Nations

xi
NUMAST: National Union of Marine, Aviation and Shipping Transport Officers
NVQ : National Vocational Qualification
OECD : Organisation for Economic Co-operation and Development
OOW : Officer of the Watch
OPEC : Organisation of Petroleum Exporting Countries
OR : Open Registers
PILOT : Payments In Lieu Of Training
PSC : Port State Control
RMT : National Union of Rail, Maritime and Transport Workers
SGLM : Seafarers Global Labour Market
SMarT : Support for Maritime Training
SMD : Safe Manning Document
SOCSI : School of Social Sciences
SOLAS : Safety of Lives at Sea
STCW : Standard of Training Certification and Watchkeeping
SWG : Shipping Working Group
T&G : Transport and General Workers Union
TMN : Traditional Maritime Nations
TNC : Transnational Corporation
UNCLOS : United Nations Convention on the Law of the Sea
UNCTAD : United Nations Conference on Trade and Development

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CHAPTER ONE
Introduction
1.1 Thesis
This thesis is about economic globalisation and how states have responded to, and tried
to mitigate the impact of some of its negative impact on domestic economies while
attempting to maximise the benefits of its more positive aspects. The main point of
emphasis in the analysis is the state’s capacity to effectively manage domestic
economies and protect local industries, especially labour, from decline. In order to
develop this analysis I have singled out the shipping industry, and, specifically, the UK
shipping industry as the focus of the study. The analyses and discussions are developed
within the theoretical framework of economic globalisation and the political economy
of skills and employment.
The thesis proceeds from the premise that globalisation is an active, continuous and
dynamic process of deterritorialisation (Scholte, 2000) and economic liberalisation
(Khor, 2001) where national barriers to cross-border socio-economic activities have
been largely removed or greatly minimised (see also Stiglitz, 2002). This, as argued by
Giddens (2002) has happened largely as a result of advanced transport and
communication technologies. A situation has developed thus whereby multinational
businesses operate freely from country to country with few restrictions from national
governments. The thesis also posits that, due to increased international mobility, global
capital has acquired great ‘political’ influence over national governments so that global
corporations are in a position to influence national government policies and ensure easy
exploitation of production factors around the world, for example labour. Furthermore,
deterritorialisation and the growing international mobility of global capital have
accelerated because of the neoliberal political paradigm adopted by states around the
world to create and promote a global free market economy (see Harvey, 2005; Chomsky,
1999; Hall, 2003; Newton, 2004).
Developments in the global political economy over the past three to four decades have
raised questions about the relationship between states and markets and the relevance of
the nation-state in a globalised world order (Hirst and Thompson, 1999; Ohmae, 1990;
-2-
Bhagwati, 2004; Wolf, 2005). Some authors have strongly argued that the state has
withdrawn and effectively let capital markets take over the management of state
economies (e.g. Strange, 1996). A more radical argument presented by globalists is that
states have lost their relevance as managers in the emerging global economic order
(Ohmae, 1990) while a more moderate argument is that states and markets are engaged
in an active and continuous process of power reconfiguration in which the concept of
state capacity and power vis-à-vis markets is continuously being negotiated and
reconfigured (Beck, 2005; Wolf, 2005). This thesis however argues that the important
point is not whether the state’s capacity to manage the economy has declined, rather, as
Short posits:
The real question is not whether the state is being replaced [by markets], but
how the nation-state is responding to the new geo-politico-economic
realities [of the emerging world order] (Short, 2001:11)
The main focus of this thesis, therefore, is the impact that globalisation has had on
domestic economies and how states have responded. The thesis will engage with these
arguments in its analysis and discussion of the developments in the UK shipping
industry and the changing relationships between the state and multinational shipping
businesses.
The shipping industry perhaps offers one of the best illustrations of the extent to which
global corporate capital effectively operates across international boundaries without
restriction from states. It also offers a clear demonstration of neoliberalism in practice
and free capital markets at work in the fluidity of its international structure and
organisation. In the introduction to his book, Nathan Lillie, remarks of the shipping
industry:
The global maritime shipping business has often been portrayed as the
archetype of unbridled free- market capitalism, burst free from the
constraints of government and trade union regulation (Lillie, 2006:1).
In these few lines, Lillie captures aptly the nature of shipping markets and the type of
relationship that exists between states and shipping capital. Although one might argue
that this is a characteristic specific to shipping by virtue of its international nature, it
does represent a unique illustration of economic globalisation. Because of the mobility
of shipping’s core capital assets and labour, shipping companies have managed, within
the space of three decades, to attain a higher level of footlooseness than those in many
-3-
other sectors. Globalisation has therefore had a particular impact on the shipping
industry and provoked a particular response from states, especially in Traditional
Maritime Nations (TMN) like the UK. As a highly globalised industry, shipping is
therefore an appropriate exemplar of the relationships between states, capital and labour
in a globalised world.
Shipping is an important industry because of its central role in international trade and its
value-added services to global production and supply chains. For advanced economies
like the UK, which are also generally Traditional Maritime Nations, the industry not
only guarantees greater access to international trade but also generates a lot of
government revenue. Similarly, smaller developing nations with the capacity to develop
a shipping industry recognise its commercial value and strive to increase their stake in it.
However, due to developments in recent years, there have been many changes in the
structure and organisation of the industry world-wide leading to the decline of maritime
clusters in many industrialised countries like the UK, the Netherlands, Denmark,
Germany and France. The term maritime cluster is used to refer to a collection of core
maritime related firms including shipping, finance, marine survey, marine insurance,
dispute resolution, ship-brokers and agents firms and ports and harbours. The decline is
partly the result of accelerated globalisation and the increased international mobility of
shipping capital in the past three to four decades leading to changing patterns of
international ship registration, administration and management.
The global shipping industry is organised into flag-states whereby, in order to engage in
commercial activities, ships are required by international law to register with a
recognised flag-state thus acquiring the nationality of the registering state (UNCLOS
Art. 91; Coles, 2002). Although ships do not have to be registered in the countries of the
owners’ nationality, most ship-owners until the beginning of the 20th century registered
their vessels in their home flag-states. However, the early decades of the 20th century
saw the emergence of new commercial registers offering ship registration and
administration services to ship-owners from all over the world for a fee. Flag-state
regimes operating these registers imposed few restrictions on entry and exit and
exercised little regulation on the corporate activities of the companies operating the
ships they registered. They were therefore different from traditional registers which
imposed tighter conditions on admission of ships and regulations on their corporate
operations. These traditional flags may also be known as ‘closed registers’. The new
-4-
registers, known as Open Registers (OR) are, in some cases, referred to as Flags of
Convenience (FoC), a term coined by the International Transport Workers Federation
(ITF) in the 1970s to refer to those Open Registry flags with no link between place of
registration and place of economic benefit or ownership.
Although the pioneer Open Registers were established between the 1920s and 1960s, it
was after the mid-1960s that many countries started ‘flooding’ this new, and clearly
lucrative, ship registration market. Some of the earliest ones include Panama, Liberia,
Cyprus, Honduras, Bahamas and Malta. It is because of the growing popularity of these
new flags among many ship-owners that the fleets of TMNs in Europe and elsewhere in
the OECD block rapidly declined (Metaxas, 1985; Alderton and Winchester, 2002;
Lillie, 2004; 2006; Sampson and Bloor, 2007). Figure 1 below illustrates the changing
ship registration patterns between 1960 and 2000. It clearly shows that from the mid-
1970s the proportion of the world fleet registered with Open Registers surpassed that of
traditional flags and proceeded to grow steadily and rapidly during the last quarter of the
20th century.
Figure 1: Ship registration trends; top six OR Nations and TMNs
Ship Registration Trends 1960 - 2000 Top six OR Nations and

TMNs
300
250
Million grt
200
150
100
50
0
1960 1965 1970 1975 1980 1985 1990 1995 2000
Year
FoC TMN
Note: The six FoCs include Bahamas, Honduras, Cyprus, Liberia, Malta and Panama while the TMNs
include the top European Maritime nations like UK, France, Germany, Norway, Netherlands and Italy
Source: Lloyd’s Register – Fairplay: World Fleet Statistics (1960 – 2000)
Because ORs are mostly located in developing countries there has been a big change in
the distribution of the world fleet in terms of registration with the largest percentage of
the world fleet being registered in developing economies since the mid-1970s. Figure 2
-5-
below illustrates this changing distribution of tonnage between developed and

developing economies.
Figure 2: World Fleet Distribution between Developed and Developing Economies

1980 – 2005
World Fleet Distribution by registration

1980 – 2005
Mil (dw) Tonnage
800
600
400
200
0
1980 1985 1990 1995 2000 2005
Year
Dev'd countries Devp'ing Countries
Source: UNCTAD Handbook of Statistics, 2006
Between 1980 and 2005 the tonnage registered in developing countries went from 47%
to 66% of the total world tonnage while developed country tonnage fell from 53% to
34%. The importance of this changing distribution of the world fleet by flags and
economies is that while certain countries have benefited from the globalisation of
shipping in terms of fleet capacity, by setting up ORs as commercial ventures and
attracting large fleets, some, particularly high-cost developed countries, have lost out.
This analysis also helps to set the stage for a more in-depth discussion on how the
economies of the countries in the latter category have been adversely affected by the
loss of fleets and the response measures they have introduced in an attempt to mitigate
this negative impact.
The decline in TMN fleets had an extensive and far reaching impact on the maritime
clusters of these states. Being the core industry and central catalyst within the cluster,
any decline or growth in shipping automatically leads to a ripple effect of growth or
decline in all the other parts of the maritime cluster. For this reason, in many of these
-6-
countries, including Germany, France and the Netherlands, the shore-side maritime
cluster of firms experienced decline (Klikauer, 2003). Furthermore, in many of these
countries the maritime sector is a major revenue generator and an important catalyst in
national economic growth. In the UK, for example, shipping is ranked as the third
highest generator of government revenue. The UK maritime cluster contributes around
£1.3bn in overseas earnings in addition to inward investment and tax revenue annually
(Shipping Network, October 2007).
Another way in which the globalisation of shipping negatively impacted on states,

particularly industrialised ones, and one which is of particular relevance to this thesis, is
the ‘erosion’ of local seafaring labour. One of the main reasons that ship-owners from
TMNs sought the convenience of Open Registers was the freedom to employ low-wage
foreign seafarers from low-cost developing countries. The decrease in TMN fleets
therefore also meant loss of employment for seafarers in these countries and
diminishing training opportunities for cadets. The combined effect of employment loss
and decline in training created a situation of incessant deterioration in the number of
qualified seafarers. The total number of qualified seafarers working on-board British
vessels, for example, declined from about 99,000 to 27,000 between 1970 and 1993.
The number of officers reduced from a total of 45,600 to 17,000 between 1970 and the
late 1990s (McConville, 1997 – 2003; House of Commons, 1993; Obando-Rojas, 1999).
The decline in the British pool of seafarers not only affected the supply of qualified sea-
staff but also diminished the supply of essential technical skills to the shore-side
maritime cluster. Shore-side maritime operations, like technical ship management,
marine survey, marine insurance, ports and harbours and ship-building and repairs,
require people with seafaring skills and experience to work in sensitive technical
positions. In a 1996 study it was determined that the demand for such skills was rising
but the supply was diminishing, thus creating a shortage which had the potential to drive
many of these firms to offshore locations (Gardner and Pettit, 1996). This development
raised concerns about the future of UK shipping, both at sea and ashore.
It is against this background of globalisation and decline that the UK government

initiated a process of response in the mid-1990s. In 1997 the government set in motion
the process of developing a strategy by which it could stop and reverse the decline in
the shipping industry, both in terms of the fleet and the skills-base. The process
culminated in the introduction of the UK tonnage tax in 2000. The tonnage tax was
-7-
designed to meet three main objectives: to rebuild the UK registered fleet by creating a
more predictable, capital- friendly and virtually tax exempt atmosphere for ship-owners;
to rebuild the seafaring skills-base by making ship-owners recruit and train more British
cadets through the Minimum Training Obligation (MTO); and to boost growth in the
shore-side maritime cluster of firms through a requirement that all participating owners
strategically and commercially manage their vessels from the UK (see; DETR, 1998;
Brownrigg et al, 2001; Selkou and Roe, 2004).
The strategy has impacted on the shipping industry in a specific way, which raises
questions about the adequacy and effectiveness of the state in responding to the negative
aspects of globalisation. For example, while there has been significant success in
recovering the British-flagged fleet, the number of qualified British officers has not
increased leading to important questions about the government’s ability to, and
commitment towards, recovering the seafaring labour force and maritime skills-base.
An important point is whether this outcome is due to ineffective implementation or to
inadequacy in the design of the strategy itself. There is therefore an important question
about how effectively the state can respond to issues affecting highly globalised
industries like shipping whose corporate capital wields immense influence.
Through this qualitative study I have tried to understand why the government chose the
particular respons e strategy that it did and I have analysed the possible reasons for the
kind of impact that its strategy had on the British shipping industry. This study therefore
critically examines the globalising developments highlighted here and analyses the
design and form of the government’s response strategy in order to develop a thesis
about the state’s capacity to effectively respond to globalisation and protect domestic
industries, especially labour, from decline. Using data collected from major
stakeholders in the shipping industry through qualitative interviews and policy
document analysis, it critically examines the Tonnage Tax Minimum Training
Obligation, the main response strategy to increase seafaring labour in the UK, with
particular attention to its design, implementation and impact.
1.2 Aims and Research Questions

As I have stated earlier, the overall aim of the thesis is to assess the state’s ability to
protect domestic industries and local labour from decline as a result of economic
globalisation. In this era of increasing globalisation in which many states have pursued
-8-
economic strategies within a neoliberal paradigm, there are important questions to be

asked about how effectively individual states can protect local industries, and especially
labour, from decline. This thesis is concerned with the decline of national seafaring
labour in Traditional Maritime Nations and the recovery strategies adopted by these
countries in response. The analysis in the previous section has shown how high-cost
industrialised states like the UK experienced a reduction in national merchant fleets and
pools of seafaring labour between 1960 to the late 1990s. Like many of the affected
countries, the UK within the past decade has introduced policy measures in an attempt
to protect and rebuild the industry. Using the UK shipping example of globalisation,
decline and state response, the thesis seeks to achieve the following aims:
i) To understand the ways in which globalisation has impacted on the domestic

shipping industries of Traditional Maritime Nations like the UK, especially in
relation to labour.
ii) To examine the form, adequacy and effectiveness of state response to the
negative impact of globalisation on domestic shipping industries, especially in
relation to seafaring labour.
iii) To examine and assess the general capacity of the state to effectively respond
to globalisation and protect domestic industries, especially in relation to labour,
from decline, within a neoliberal paradigm.
In order to achieve these aims the study addresses a number of key research questions.
Arising from the analysis and discussion in chapters two and three are a number of
questions concerning the ability of the state and its effectiveness in responding to
globalisation and implementing policies which effectively protect domestic industries
and local labour from decline. Chapter two specifically examines the changing
relationship between states and markets and concludes that there is a continuous process
of reconfiguration between these two, in which the position of individual states and
their ability to protect local industries depends on the choices that they make vis-à-vis
capital markets (Wolf, 2005). The discussion also suggests that, far from the widely
held view that states, in the neoliberal era, act the way they do because of corporate
pressure, many governments have specifically promoted the free capital market project
through supply-side economic policies in an attempt to maximise the benefits of
-9-
globalisation (Jessop, 2002; Beck, 2005). At the same time however, the ambiguity of
the neoliberal state’s position vis-à-vis capital and labour is highlighted, leading to the
suggestion that in the attempt to promote free capital markets the state’s ability to
protect local labour has been greatly compromised, with the consequence that many
domestic labour markets have become vulnerable and declined due to corporate
exploitation.
In light of this ambiguity this thesis, using shipping and seafarer labour as an example,
examines the extent to which the state, operating within a neoliberal paradigm, retains
the capacity to effectively manage the domestic economy and intervene on behalf of
labour. Because of the globalised nature of shipping and the highly mobile character of
shipping capital, many Traditional Maritime Nations adopted policies which led to a
situation of extensive deregulation in order to prevent loss of fleets. The deregulation of
the shipping labour market led to a particularly acute decline in the number of qualified
merchant navy officers in countries such as Britain, Germany and The Netherlands.
The reason for choosing shipping to illustrate state response to globalisation is because
it is one of the most globalised industries and one which aptly illustrates the impacts of
globalisation on domestic industries. As pointed out in chapter two, it is described as the
exemplar of a globalised industry (Klikauer, 2003; Sampson, 2003; Alderton et al, 2004;
Sampson and Bloor, 2007). As one of the major maritime nations that have experienced
drastic decline in fleet and seafarer labour, the recent history of UK shipping provides a
clear example of the way TMNs may address the implications of key aspects of
globalisation, as well as the outcomes. The main objective of the thesis is to examine
the strategies adopted by the UK as a response to the erosive impact of globalisation in
the UK shipping industry, namely, the decline in the UK registered fleet and the UK
pool of qualified officers.
From the discussion presented in the earlier sections of this chapter it seems that, in
spite of the government’s efforts through the tonnage tax strategy, there has been little
improvement in the output of qualified British junior officers. The UK fleet has grown
however and, by extension, the shore-side maritime cluster is expanding and cadet
intake levels have improved significantly. Using this study of decline in UK shipping
and the nature and effectiveness of state response, this thesis will examine the extent to
which nation states retain the capacity to respond to globalisation and mitigate some of
- 10 -
its negative impacts like loss of employment and depletion of skills. The specific
questions to address in the build-up to the main thesis include:
(i) How has government responded to the globalisation of shipping?
Through this question I specifically examine the form of the government’s response and
the process leading to its design and adoption. In order to determine the effectiveness or
adequacy of the response the thesis needs to explore its design, adoption and
implementation. I will therefore use a detailed content analysis of the policy documents
detailing the process of designing the state response in order to understand the nature of
the response.
(ii) What shaped the government response?
Through this question I explore the factors and forces which shaped the government’s
strategy. In other words I seek an explanation on why the state responded as it did. I
therefore expand the analysis by critically examining the factors that influenced the
design of the strategy and how the government worked with the various, and often
conflicting, interests of the maritime stakeholders in order to arrive at a consensus with
regard to the strategy. Thus the focus is on the interests of labour on one hand, and
capital on the other. The discussion of neoliberalism in chapter two and the analysis of
the changing relationship between states and capital raise questions about how national
governments design policies for economic intervention. Through this question the study
will examine the process of designing and adopting the tonnage tax and how the context
of conflicting interests may have shaped it and influenced its adequacy and/or
effectiveness.
(iii) How effective has the government response been?
The study, through this question, critically examines the performance of the tonnage tax
strategy in order to determine how effective or adequate the government’s response has
been in its attempt to protect the shipping industry, and especially seafaring labour,
from decline. The analysis particularly considers the paradox in the outcome of the
response. That is, success in fleet recovery on the one hand but failure to increase the
number of seafarer officers on the other.
(iv) How could the response have been more effective?

- 11 -
After determining the impact of the tonnage tax the study further examines the likely
reasons for its impact (or lack thereof) and explores some of the possible alternatives
that the government might have considered. This question therefore has two parts to be
addressed: why the strategy failed and what might have been done to ensure success. At
the same time this question focuses attention on some of the possible constraints on
effective and adequate state response in light of the discussion in chapter two about
globalisation and the influence of capital markets.
To answer these questions the study follows an elaborately designed research plan
which involves the collection and analysis of data through interviews, documentary
content analysis and secondary data analysis as described in chapter four on methods
and methodology.
1.3 Thesis Structure

The thesis is organised into nine broad chapters. Chapter two is the first of two literature
review chapters. This chapter considers the relevant literature on globalisation, states
and markets and it sets the background and platform for the discussions in subsequent
chapters about globalisation and the role of states in the management of domestic
economies in the emerging global economic order. The chapter also reviews literature
on changes and developments in the shipping industry over the past four decades
against the background of economic globalisation and examines the impact of
globalisation on nation states, using the shipping industry as an illustration.
Chapter three, the second literature review chapter, specifically discusses the decline of
British shipping and the design of the tonnage tax as the main government response
strategy. It traces out and maps the history of modern-day globalisation in the shipping
industry and assesses the role of Open Registers in this process. It also reviews a
number of relevant government policy documents which trace the history of the
government response to the decline. Finally it reviews analyses of the performance of
the UK tonnage tax.
Chapter four provides an outline of the methods and a discussion of the methodology
employed in the research. It outlines the methodological paradigm within which the
research is located and presents the research design including a discussion of the various
- 12 -
data sources, the methods of collecting and analysing data and the limitations and
challenges of the research design and fieldwork, including ethical considerations.
Chapters five, six and seven present an analysis of the empirical data collected in the
course of the study; through an analysis and discussion of the research data these
chapters critically consider the design and implementation of the tonnage tax strategy.
They trace the development and adoption of the strategy, examining in chapter five how
the government worked with key stakeholders in the maritime sector to design a
comprehensive policy and recovery strategy for UK shipping. This chapter also
examines and discusses the government’s diagnosis of the decline in seafaring skills and
the main motivation behind its response. The difficult position of the government in
responding to the skills decline is highlighted in a brief discussion of the tripartite
consultative approach adopted in which the other two main parties, tha t is, the corporate
industry and the unions, presented different and conflicting interests.
Using (mainly) interview data from corporate shipping industry managers, chapter six
examines and discusses company recruitment and employment policies and the main
factors which influence companies’ policies on sourcing and developing seafaring
labour. The chapter also examines the impact of company strategies on cadet
recruitment and training in the UK. Chapter seven explores the cadet training process in
the UK. It examines the training programme and the structure of the cadet courses but
also analyses the wider organisation of the training establishment and the role that
shipping companies, training agencies and training colleges play in the process. It
mainly relies on interview data from people directly involved in the cadet training
process, that is, cadet college training administrators and staff. More importantly it
presents the ‘first-person’ accounts of individual cadets on the training programmes and
the general training atmosphere in the UK. The main concern of the chapter is to
determine the reasons for the failure of the government strategy to increase the number
of British junior officers. In order to do this the chapter examines three different views:
the shipping corporate industry view, the training establishment view and the ex-cadet
view, in an attempt to establish what the main obstacle to increasing the number of
junior officers might be.
Chapter eight presents the main assessment and discussion of the research findings
bringing together the main themes in the empirical chapters in order to address the
- 13 -
research questions. The chapter examines how the government has responded to
globalisation in the shipping industry and the shape that this response has taken. In
assessing the effectiveness of the strategy the chapter examines the main factors which
influenced its nature and form. The final section of the chapter looks at how the
response might have been more effective and examines some of the main obstacles to
effective state intervention in the management of globalised industries like shipping.
The final concluding chapter applies the analysis of UK shipping as an example of

globalisation, decline, and attempted recovery, to the main questions of the thesis. In
particular, it addresses the extent to which national states retain the capacity to
effectively mitigate some of the negative impacts of globalisation. This chapter
considers the wider issues of globalisation and its impact on states, capital and labour.
In other words, having examined the empirical evidence in chapters five, six and seven,
the thesis concludes by explaining what the data may tell us with regard to the capacity
of states and their potential to protect domestic economies in a globalised context.
- 14 -
CHAPTER TWO
Globalisation and Shipping
Introduction
The shipping industry is, undoubtedly, one of, if not, the most internationalised
industries today. Its international nature and structure has been discussed and analysed
by many authors including Goss (1989), Alderton and Winchester (2002), Roe, (2002),
Klikauer (2003), Alderton et al (2004), Selkou and Roe (2004), and Sampson and Bloor
(2007) who all agree that the shipping industry is uniquely globalised. Some of the
features which give it its international shape and structure include the international
mobility of its primary assets and its labour force, the international nature of its
operations, its role as the main vehicle for international trade and the fact that it has
developed a specialised satellite management component which has greatly enhanced its
globalised profile and cross-border economic activity. Furthermore, shipping capital
enjoys a higher level of global ‘buoyancy’ than in any other industry. This is largely as
a result of the Open Register system whereby ship-owners can register their ships in any
flag-state in the world depending upon their preference.
This chapter is an exploration of globalisation in the context of shipping. The aim is to

use shipping to illustrate the way economic globalisation, in the past three to four
decades, has affected the capacity of nation states to effectively manage and protect
domestic economies. Shipping may, indeed, be described as the globalised industry par
excellence (Sampson and Bloor, 2007) but also, as the main vehicle for international
trade and the essential link in global production and supply chains, it is a vehicle and
facilitating factor in the process of economic globalisation. The chapter will trace key
developments in the industry in recent years and analyse the dynamic relationship
between shipping and nation states.
As suggested in chapter one, shipping is considered an important industry by many

nations. For countries with an embedded maritime history, shipping has, over the years,
attained social, historical and economic significance because of its role in supporting the
growth and prosperity of a large cluster of shore-side maritime firms and as a major
employer. Shipping, in these countries is also closely linked with long histories of
- 15 -
economic prosperity. For the emerging New Maritime Nations (NMN) the industry is
important in as much as it presents commercial opportunities which generate revenue
through ship registration and administration and via employment. As Alderton and
Winchester (2002) observe, the revenue that some of these countries earn from ship
registration makes a big difference to their small economies. It is for this reason that the
New Maritime Nations (NMNs) have engaged TMNs in fierce competition for the ship
registration market in the second half of the 20th century. This competition is largely
responsible for the restructuring of the global shipping ‘landscape’ and the decline of
fleets and seafaring labour in many formerly strong maritime nations.
What is remarkable about the shipping industry is that although its history of
globalisation, as defined in this thesis and supported by Scholte (2000), Giddens (2000,
2002), and Stiglitz (2002), started in the early decades of the 20th century, it has a long
history of internationalisation whereby shipping companies, though locally based have
always operated internationally and occasionally used foreign flags and employed
foreign seafarers (Metaxas, 1985; Alderton and Winchester, 2002). As early as the 18th
century, ship-owners were able to register their ships in, and operate them from,
countries other than their own for both economic and political reasons. At the same time,
ship-owners have been able to employ foreign labour in order to reduce operations costs
in an attempt to maximise profits. British ship-owners started using foreign seafarers as
early as the mid 19th century (Coles, 2002). It is in the 20th century, however, with the
advent of Open Registers that shipping transformed into a fully globalised industry in
the sense that companies were able to operate freely across national borders.
Due to the momentum of the pre-twentieth century internationalisation, globalisation in

the shipping industry, in the twentieth century, has been both distinct and quick. As the
main vehicle for international trade, from the 1940s to the 1970s, the industry grew as
part of the rapid and steady growth in world trade in the post World-War-Two era
(Stopford, 1997; Hirst and Thompson, 1999). Most significantly, shipping capital has
been able to break down national barriers and obstacles to cross-border mobility and
operations in a way unequalled by many other industries (Sampson and Bloor, 2007;
Sampson and Kahveci, forthcoming).
The chapter examines the globalisation of shipping in light of the key definitions and
descriptions of globalisation and argues that it is primarily a process of economic
- 16 -
liberalisation. A process by which national economic barriers are gradually eliminated

to create an economic environment that frees capital, finance and labour from the
confines of national economic and geo-political territories (Scholte, 2000; Stiglitz,
2002). It is a process in which shipping is not only an excellent example but also the
main drive r, being the central vehicle for cross-border production and supply chains. As
Alderton and Winchester (2002:36) observe, it is not only pivotal to world trade, but
also the only example of a fully globalised industry”. One of the key points in this
definition of globalisation which influences the tone of the thesis is that it is a dynamic,
current and continuous process rather than an outcome (see Sampson and Kahveci,
forthcoming).
In order to meet the objectives set out, the chapter examines developments in the
shipping industry over the past three to four decades in the context of socio-economic
relationships which constitute the impetus for globalisation. It lays particular emphasis
on Giddens’ (2000, 2002) argument that globalisation is a phenomenon of the last forty
years, mainly influenced by advanced revolutions in communication technologies. At
the same time, it examines the complex relationship between states and markets, and the
transformation of the state and its role in the emerging global economic scene.
The chapter is organised into five sections. Section one explores the nature and
character of shipping and highlights some of its unique features as an international
industry. Section two introduces a definition of globalisation through a critical
consideration of the main debates about economic globalisation, examines and discusses
its growth in modern times and assesses its impact on the capacity of nation states in
relation to economic management. Section three extends the discussion on economic
globalisation by exploring the evolving relationship between states and markets over the
past four decades and critically examines the rise of the neoliberal state and its impact
on this relationship. Finally, section four examines how shipping labour markets have
changed as a result of globalisation and the emergence of global satellite ship
management companies.
2.1 The Nature of Shipping

The shipping ind ustry possesses a set of features which make it an appropriate focus for
globalisation debates. It is because of these features that it stands out and has been
described by many analysts as one of the most globalised industries (Sampson, 2003;
- 17 -
Selkou and Roe, 2004; Sampson and Bloor. 2007; Sampson and Kahveci, forthcoming).
Some of these features include the mobility of its primary assets, an internationally
mobile labour force and a unique system by which ship-owners may freely choose and
change the nationality of their ships without restriction from the home country (Paixao
and Marlow, 2001; Alderton and Winchester, 2002; Coles, 2002). Fur thermore,
shipping stands in a privileged position as the main vehicle for international trade which
also means that the nature and scope of its commercial operations is international.
Goss has described shipping as:
An industry which, of necessity, operates internationally, selling its services

in many countries and, correspondingly, buying such factors of production
as insurance, fuel and the ships themselves on a world market (1989:75).
This industry is characterised by an internationalised pattern of organisation, reflected in

its national composition. Helen Sampson’s (2003) example of ‘The Santos Sunset’
below diagrammatically represents the core of this intricate arrangement:
Figure 3: The Santos Sunset
Source: Sampson, 2003:260 (see also DeSombre, 2006 for a discussion of this
international organisation of the industry)
What this diagram illustrates is a complex international structure in which ships are
often owned in one country, registered in another, managed from yet a different country,
- 18 -
staffed by crews from different parts of the world and operate all over the world
carrying cargo belonging to different merchants, of different nationalities. Three aspects
of this arrangement require further attention because of their significance in the overall
analysis of international shipping: ownership, registration and crewing.
The largest percentage of the total world fleet, in terms of ownership is attributable to
only thirty countries which largely comprise OECD countries and the newly emerging
maritime nations of Asia. In terms of dead weight tonnage (DWT), as of 1st of January
2005, the distribution of world tonnage in percentages is as shown in the chart bellow:
Figure 4: World Fleet by Ownership
World Fleet by Ownership DWT%

6.5
0%
OECD
24.50%
New Asian
68.70% Maritime
Nations
Others
Note: The Institute of Shipping Economics and Logistics (ISL) analyses the ownership patterns of the
world merchant fleet yearly, namely the national and foreign flag fleets of leading shipping nations.
Source: ISL Market Analysis 2005.
In comparison, as of 1 st January 2005, 65.1% of the total world fleet was registered with
foreign flags while only 44.9% of the tonnage was registered in the country of
ownership. OECD countries had the largest percentage share in ownership but 73% of
this tonnage was registered in foreign countries. 67.4 % of the total EU owned fleet was
foreign registered. This has created a situation whereby both the TMNs and the new
flag-states are unable and/or unwilling to exercise effective regulation over the
economic activities of shipping companies. In such a situation many companies operate
with little interference from states.
The issue of staffing the global fleet, for example, has been a contentious one since the
middle of the 20th century and has played a significant role in shaping the current
- 19 -
international ‘terrain’ of the industry. The main reason why many ship-owners in the
1970s and 1980s opted to register their ships in Open Registers was to escape the
stringent crew nationality regulations of their home countries, that is, the traditional
maritime countries of the OECD. However, over the years most of these countries have
responded by ending these requirements and allowing ship-owners to employ crews
from any part of the world. The following figure shows where the crews for the world
fleet come from:
Figure 5: World-Wide Supply of Seafarers by Region
Worlwide Supply of Seafarers
14% OECD
25%
E. Europe
30% Africa/L.
18% America
Far East
13%
Indian
Subcontinent
Note: BIMCO and ISF run a joint annual survey of the demand and supply of seafarers and analyse the
structure of the global seafaring labour force.
Source: BIMCO/ISF Manpower Survey 2005
The chart shows that although the OECD countries continue to contribute significantly
to the total worldwide supply of seafarers, the contribution of the new labour supply
countries is much bigger. Currently the international structure of the industry is such
that the largest percentage of the world fleet is owned in the OECD states; the highest
percentage of this is registered in Open Registers. The largest number of seafarers
comes from low-wage labour supply countries of Asia and Easter Europe who, in many
cases, neither own nor register a significant percentage of the global fleet.
The features of the industry, described above, have evolved over a long period of time.
The industry, although always international in nature, was not always as globalised as it
is now. But before I move to an in-depth analysis of globalisation, states and the
shipping industry, I will first examine the concept of globalisation and analyse the
- 20 -
major theoretical debates surrounding this highly contested subject. The questions to
ask here include: what essentially is globalisation? How does the shipping industry fit
into the wider cauldron of global economic processes? What is it, which makes the
shipping industry an exemplar of globalisation amongst all the others?
2.2 What is Globalisation?

Globalisation is certainly one of the most discussed topics in modern times (Scholte,
2000; Giddens, 2002; Stiglitz, 2002). It is a highly contentious subject that has
generated much debate, many theories and definitions. The term is used, if not misused,
by many. As Scholte (2000) observes it is a concept which applies to, and caters for, a
diverse variety of perspectives: cultural, political, social and economic. Therein lies the
complexity of its definition. Wolf (2005:14) notes that the term is ‘unimaginably broad’
while Hirst and Thompson (1999:xiii) describe it as the ‘grand narrative of social
sciences’ which deals with ‘often very different cultural, economic and social processes’.
The main focus of this thesis, however, is economic globalisation.
Even from a purely economic perspective different people or schools define

globalisation in distinct ways (Held and McGrew, 2002 and see Scholte, 2000 for a
detailed discussion). Simply put however, and to borrow from Wolf, economic
globalisation is ‘the integration of economic activities across borders, through markets’
(Wolf, 2005:14) and it involves a process of eliminating obstacles to such cross-border
economic integration. There are many variations in the views, opinions and theories on
the nature and extent of these processes which are shaping the contemporary global
economic world.
The two main positions on what comprises globalisation are held by globalists, on one
side, and anti- globalists, on the other (see Held and McGrew, 2002). These may be
further divided into ‘extremes’ and ‘moderates’ whereby extreme globalists are those
who argue that not only is globalisation inevitable but it is desirable with beneficial
effects around the world (Wolf, 2004; Ohmae, 1990, 1994, 1996; Giddens, 1998, 2002).
Giddens (2002), for example, argues that the extent of globalisation in the modern era is
demonstrated in the unequalled levels of international trade, involving a much wider
range of goods and services and a much higher level of finance and capital flows. This,
he argues, is enhanced by advanced telecommunications technology which enables easy
and unrestricted transfer of large sums of money around the world. The extreme anti-
- 21 -
globalists equally acknowledge the irresistibility and influence of globalisation but find
it undesirable and malevolent, indeed, some anti-globalists have equated economic
globalisation to colonisation (Khor, 2001; Ling, 2000), and Westernisation or
Americanisation (Taylor, 2000; see Scholte, 2000 and Held and McGrew, 2002 for
amore detailed analysis ).
There is, however, much more convergence of the basic views among the ‘moderates’
of both sides as opposed to the extremes. Moderates acknowledge the irresistibility and
influence of globalisation but are more inclined to critically analyse its benefits. The
general view is that globalisation has brought both good and bad but the extent of each
depends on the theoretical stance taken. Moderate globalists like Scholte (2000), Short
(2001), Stiglitz (2002), Sorensen (2004) and Beck (2005) argue that, whereas
globalisation has a measure of negative impacts and outcomes in many parts of the
world, its benefits to many economies and societies have been immense. They believe
that the economic face of the world could be and, in some cases, has been positively
transformed through economic globalisation. Stiglitz for example observes that:
…. globalisation – the removal of barriers to free trade and the closer

integration of national economies – can be a force for good and that it has
the potential to enrich everyone in the world…. (2002:ix)
He however continues to stress that for this potential for good to be harnessed it needs
proper management, thus indicating that globalisation can be for good or for worse
depending on how it is managed by both states and global businesses.
Moderate anti- globalists, on the other hand, while acknowledging some positive
economic outcomes, insist that globalisation only benefits a small fraction of the world
population while impoverishing the rest. They highlight the inequitable distribution of
the benefits of globalisation between developed and less developed countries – the north
and the south (Holton, 1998; Hurrell and Woods, 1999; Held and McGrew, 2002).
One important, albeit contested, aspect of this analysis is the historical context within
which globalisation may be considered (see Giddens, 2002). This comes out of the
argument about the cyclical nature of economic processes over centuries (see Scholte,
2000) and a suggestion that the current phase of globalisation is not necessarily novel
but follows from earlier and equally influential phases (Hirst and Thompson, 1999).
Although contested this theory seems to apply to the case of shipping because the
- 22 -
current state of globalisation in shipping is preceded by a long history of

internationalisation (Metaxas, 1985). In the context of shipping, therefore, one might
say that ‘modern’ globalisation, which dates back to the early decades of the 20th
century, and marked by the emergency of Open Registers, is an advanced phase of an
earlier, milder, phase of globalisation. The current phase, however, has developed
within a cauldron of wider globalising economic processes which, according to some
authors (e.g. Giddens, 2002), increased in momentum in the mid-20th century. Although
the pre-20th century phase of internationalisation forms an important element for the
analysis of the industry in the present phase, the focus here is on the process of
deterritorialisation in the second half of the 20th century during which businesses like
shipping companies have been able to break through national economic barriers and
engage in unrestricted transborder commercial operation. Consequently there has been a
greater integration in the world economy and enhanced interaction at a global level
facilitated mainly by advanced transport and communication technology (Scholte, 2000;
Giddens, 2002; Stiglitz, 2002).
For the purpose of this thesis, therefore, globalisation is defined as a process of

deterritorialisation which facilitates free and unrestricted movement of capital thus
allowing easy cross-border economic activity and greater international economic
integration. It is this definition which forms the basis for discussions and analyses of
impacts and state response throughout the thesis.
2.2.1 Globalisation in Historical Context
As explained in the previous section, globalisation stimulates much debate and has been
the subject of many theories regarding its form, nature and impact. One theory is that
globalisation is a process which has been going on and growing steadily over the past
several centuries (Hirst and Thompson 1999; Scholte, 2000). The purpose of this brief
discussion of the historical context of globalisation is to try and put into perspective the
developments in shipping in the centuries before the 20th century which, as exp lained
earlier, are important in understanding the rapid globalisation of the industry in the past
four decades. The current phase, which has seen a relatively faster and greater growth,
in the scale of its socio-economic impact, however, only dates back to the mid-20th
century (Short, 2001; Scholte, 2000; Wolf, 2005). Indeed the verb “globalize” was
coined in 1940s by Oliver Raiser and B. Davies (1944:39) to refer to the concept of
- 23 -
universalisation. The point is that globalisation has both a recent aspect to it and an
older provenance.
Scholte (2000:62-63) has identified three periods in the chronological development of

globalisation, namely, the global conscious period which started 1000 years ago, the
supraterritoriality period which started in the mid-19th century and gradually grew
through the space of a century, and finally the global relations period, which started in
the 1960s and has, within the space of three and a half decades, propelled global
economic relations to a totally new level (see also Beck, 2005; Wolf 2005). It is this
latest period that most analysts refer to while they largely ignore previous and equally
significant periods in the chronological development, as noted by Hirst and Thompson
(1999).
It is important to add that although the process of supraterritoriality, as described by

Scholte (2000), runs through the three periods; it is only from the mid-20th century that
extensive transborder economic activity and international economic integration occurred.
The fast growth in telecommunications and transport technologies and the resulting
increased trans-border communication and interaction has led to an unprecedented level
of international interaction and transborder economic activity (Hirst and Thompson,
1999; Giddens, 2002; Stiglitz, 2002). Scholte’s outline of the three phases of
globalisation is particularly important for the analysis of the globalising processes in the
shipping industry since, as we shall see in later sections, these processes have their roots
in developments during the 18th and 19th centuries, developments such as the use of
foreign seafarers and foreign flags (Metaxas, 1985).
Hirst and Thompson’s (1999) analysis of globalisation is also relevant in this respect.
According to these authors the history of international economic activities dates back
many centuries: They cite developments in the 14th century, that is, the emergence of
organised German iron and agricultural merchants, British cotton and wool merchants
and Italian international banking companies. In the 17th and 18th centuries colonial
expansion opened many countries worldwide to a lot of economic activities and many
international trading companies may be identified such as the Dutch and British Indian
Companies; the Muscovy Company; the royal Africa company and the Hudsons Bay
company. These companies expanded trade and investment activities during the colonial
period and are possibly the origin of the now widely applied concept of Foreign Direct
- 24 -
Investment (FDI) (Dunning, 1993). FDI is defined, by the United Nations Conference
on Trade and Development (UNCTAD) as investment made to acquire lasting interest
in enterprises operating outside of the economy of the investor (see also Dunning, 1993).
The industrial revolution between the late 18th and early 19th century introduced the
concept of international manufacturing and, according to Hirst and Thompson (1999:20),
‘presents the earliest precursor to the modern-day MNC’. During this time international
companies sought favourable investment opportunities abroad, especially in North and
South America and later Africa and Australia and carried out overseas explorations for
minerals and raw materials. In this way the concept of FDI was expanded as
manufacturing companies sought to supply their products abroad through domestic
manufacturing (Dunning, 1993).
Hirst and Thompson therefore argue that there was growing economic activity in the
form of trade and foreign investment between the 17th century and early 20th century
such that by 1920s manufacturing multinationals appeared and were well established.
The rapid growth in international trade was only broken by the depression of 1930s and
1940s but picked up after the Second World War leading to the fastest and greatest
growth in international trade ever experienced (Stopford, 1997).
With regard to migration and international labour markets, these autho rs identify three
phases. First, there was the involuntary slave labour migration in the pre-1850 phase
(see also Castels and Miller, 1993). This was followed by the voluntary post-1850 mass
migration from Europe to ‘new lands’ like America, Africa, and from Russia to central
Asia and Siberia, the Far East to South Asia and from India to Africa (see Segal, 1993).
This phase ended during the mid-war years due to the economic slump and the
introduction of anti- immigration policies by recipient countries like America. The third
phase started in the post-war era and initially involved Europe and America but soon
included large numbers of migrant workers from developing countries. In the 1970s and
1980s, it took the form of controlled migration of workers to developed countries. This
is the latest and, by far, the large st migration phase.
This adumbration of the history of globalisation is important in the discussion of

processes and developments in the shipping industry. We shall see in later sections how
the OR concept was developed as early as the 18th century and how the use of foreign
- 25 -
seafarers started evolving from around the same time. These changes took place
alongside the general processes of economic globalisation as identified above.
The current phase of globalisation represents a complex, dynamic and often antagonistic,
set of relations revolving around states and markets which has produced three
significant outcomes in the past three and a half decades: increased interaction and
interdependency among states, reduced national barriers to cross-border trade and
investment and the emergence of a three-level international regulatory system, namely,
national, supranational and international levels (Selkou and Roe, 2004). This structure
has evolved as a result of state responses to the growing influence of mobile global
capital (Beck, 2005).
Globalisation, as defined earlier, is basically a socio-economic process and, in the tone

of Marxist political economy, it is primarily a process through which ‘capital by its
nature drives beyond every spatial barrier [and] conquer[s] the earth for its market’
(Marx, 1857-8: 524, 539, cited in Scholte, 2000). The central features of this process are
trade, finance and capital operating internationally and mainly driven by multinational
enterprises under the enabling conditions created by the ‘competition state’ (Dunning,
1993; Cerny, 1990, 1997) in the effort to attract and retain global capital (Beck, 2005;
Scholte, 2000). Perhaps the greatest distinguishing feature of modern globalisation is
the nature and role of the state. Whereas the various international economic activities
were state-controlled in the earlier phases of globalisation, increasingly the state has
retreated to a more administrative role while markets have become dominant (Strange,
1996). This feature calls for a consideration of the role of the nation-state in modern-day
globalisation. It is necessary to assess, in the remaining sections of the chapter, the
extent of its retreat in the evolving global economic setting.
2.2.2 Nation States in Modern-day Globalisation

In considering the impact of globalisation on the nation state I consider a number of
definitions of economic globalisation which portray the changing relationship between
states and markets. Wolf (2005:14) describes globalisation as ‘the integratio n of
economic activities across borders, through markets’. Scholte describes it as:
…a reconfiguration of [socio-economic] geography, so that social space is

no longer wholly mapped in terms of territorial places, territorial distances
and territoria l borders (Scholte, 2000:16).
- 26 -
Held et al (1999:16) also describe it as ‘a process (or set of processes) which embodies
a transformation in the spatial organisation of social relations and transactions’ while
Beck (2005:127) sees it as a process of power struggle between states and capital
markets.
These definitions highlight certain key elements in the process of globalisation and the
position of the state: economic interaction, power struggle, international space,
territoriality and transformation. There is also the important element of international
spatial transcendence and economic integration. All these elements indicate a specific
impact on the nation state. There is a strong suggestion of deterritorialisation and
economic integration through which the position and role of the state is undergoing
extensive transformation. The question to address here is how this process affects the
capacity of the individual nation state with regard to national and international
economic planning and development.
Just as in all matters relating to globalisation, the ‘floor’ here is sharply divided into
those who predict the decline and ultimate extinction of the state (Ohmae, 1995;
Bhagwati, 2004; Wolf, 2005), those who think that the state grows stronger and even
more significant in relation to international economic governance (Hirst and Thompson,
1999; Saul, 2004) and those, in the middle, who acknowledge the growing influence of
capital markets and the consequent transformation of the state but also see a sustainable
metamorphosis of states into entities with new but equally important roles in global
economic regulation (Beck, 2005; Sorensen, 2004). These three positions are
represented by the weak-state; the strong-state and the adaptive-state arguments
(Hobson and Ra mesh, 2002; Held et al, 1999, 2005).
The weak-state argument suggests that nation-states and their borders are not relevant in
the emerging global economic order. They celebrate the growing influence of markets
and proclaim the ultimate demise of the natio n-state (Holstein, 1990; Ohmae, 1990;
Naisbitt, 1994; Wolf, 2005). The strong-state argument, on the other hand, posits that
the state still remains strong and may even become stronger as the primary and most
essential player in the regulation of international economic activities. The proponents
argue that global markets, which are purported to undermine the capacity of the state are,
in fact, highly dependent on state machinery and infrastructure to guarantee the success
of their commercial operations (Zys man, 1996; Doremus et al, 1998; Hirst and
- 27 -
Thompson, 1999). Hirst and Thompson argue that, contrary to the weak-state argument,
the role of states is becoming even more significant with the growth of this process
which, for this reason, they choose to describe as internationalisation of national
economies rather than globalisation.
The adaptive state or the transformationist state is a more cautious and analytical
approach which opts for a more critical assessment of the processes and events shaping
current global economic trends. It suggests that while significant socio-economic
changes are taking place which are altering the nature and role of the state, it is
premature to proclaim the demise of the state as a regulatory actor (Sorensen, 2004).
They instead see globalisation as a process of realignment and active renegotiation of
power relations between states and markets (Beck, 2005). The main issue, according to
the adaptive state theory, is not how the state has strengthened or weakened but, instead,
how it has changed and to what effect, both locally and internationa lly (Cox, 1997;
Scholte, 2000; Short, 2001; Sorensen, 2004).
The argument in this thesis pre-supposes that the deterritorialisation (Scholte, 2000)
theory of globalisation and the moderate, adaptive state view of the modern state offer
the most helpful understanding of the situation. Whilst national economies have opened
up leading to increased international integration, this does not necessarily render the
nation state irrelevant or powerless as a player in the global economy. In the process of
responding to new economic realities the state is inevitably transformed, but as Wolf
observes:
… the economic processes will not compel the death of state…The policies
and capacities of states remain central to how economic globalisation works
(2005:16).
According to Beck (2005) globalisation is a process of power struggle in which the state
is being challenged to respond to the growing influence of capital mobility in order to
retain its capacity for economic management. He argues that:
…the coercive character [of capital] might be capable of awakening the

mercantile spirit even in belligerent states, and tempting them onto the
rugged path of political self transformation (2005:127).
He continues to argue that states have the potential capacity to effectively respond to the
‘coercive character of capital’ but whether or not this happens depends on the choices
- 28 -
that each state makes vis-à-vis economic globalisation. This argument will be re-
examined in the analysis, in subsequent chapters, of the UK’s response to the impact of
globalisation on domestic shipping.
The next section continues this examination of globalisation and its impact on national
economies by looking at the globalising developments in the shipping industry over the
past four decades. It discusses the changes that have taken place in the organisation of
shipping labour and capital and analyses the ways in which these changes illustrate a
particular form of globalisation. Most importantly it presents the industry as a good
example of economic globalisation. The mobility of seafarer labour and the general
‘buoyancy’ of capital are core features of the industry and indicative of the form and
extent of its globalisation. These aspects have been largely omitted from the main
literature on economic globalisation.
2.3 Globalisation in the Context of Shipping

From the perspective of the shipping industry globalisation takes on a particular and
unique form. There is a set of features, as discussed in earlier sections of this chapter,
which give globalisation in the context of shipping a distinct and unique ‘flavour’.
Some of the features which influence this difference include the mobility of its capital
assets and the highly deregulated international business atmosphere which has evolved
because of the establishment and rapid growth of the Open Register system. Another
important aspect of the globalisation of shipping is the emergence of a unique global
labour market for seafarers (Wu, 2003, 2004, 2005; Winchester et al, 2006; Wu and
Morris, 2006) as a result of shipping companies going overseas in search of cheap
labour and setting up global satellite recruitment and crewing agencies (Klikauer, 2003).
In most of the globalisation literature the shipping industry is presented and discussed
simply as a ‘node’ in the complex chain of global production and supply of goods.
Rarely is it discussed as an industry in its own right. Its complex international
organisation and the mobility of its capital is largely lost in the literature and
overshadowed by the manufacturing, finance and service industries. It is often discussed
and presented as part of the globalising processes rather than a globalised industry in its
own right (see Stiglitz, 2002; Dunning, 1993). This is perhaps because the definition of
a ‘globalised industry’ has so far concentrated on, and given prominence to, the size,
global spread and extent and impact of the international activities of its companies
- 29 -
rather than the ‘mechanics’ of it. The point is that even the smallest shipping company,
which might appear localised, is often highly globalised by virtue of the mobility of its
capital and extensive business operations across national borders.
Interestingly, even in texts like Castree et al (2004) where cross-border capital

movement and labour mobility are extensively discussed, the shipping industry and
seafaring labour are not mentioned, even though these two lend themselves as examples
of how capital and labour can move freely, between states, in a world without barriers
as postulated by extreme globalist analysts (e.g. Ohmae, 1990, 1995). It is, instead,
mostly studied as an integral auxiliary service to the manufacturing industry. Shipping
is a critical example of globalisation (Sampson and Bloor, 2007), not necessarily
because it is by definition global, though it is, but because shipping capital possesses a
high capacity for global mobility and companies operate freely across borders. It is also
an industry which, in its role as the main link in, and principal facilitator of international
production and supply chains, has become an integral part of that growth.
In recent years, however, there has been a growing body of literature in the area of
globalisation and shipping (e.g. Goss and Marlow, 1993; Roe, 2002; Selkou and Roe,
2004; Sampson and Bloor, 2007) which has helped to highlight the extent to which
shipping has globalised since the 1960s and the resulting policy complexities and
challenges for nation states. Most importantly, this literature shows the extent to which
globalisation in the industry has placed states in an ambiguous position with regard to
the regulation of capital thereby necessitating increased reliance on regional and
international regulatory structures in an attempt to reassert regulatory control over
shipping activities. Even at these regional and international levels, the industry still
presents complex regulatory difficulties and dilemmas for the individual nation state
(Sampson and Bloor, 2007).
Historically, shipping was always an international industry, often comprising small

companies which operate within a wide international area. Because of the importance of
the maritime sector for economic and strategic reasons, states controlled and regulated
most aspects of shipping with many states, for example China, actually owning and
controlling the shipping sector. Even in ‘open market’ countries like the US the federal
government strictly controlled the industry through the US Shipping Board (Metaxas,
1985; Goss, 1989; Alderton et al, 2004). The state, for example, dictated the nationality
- 30 -
of the crew on-board its vessels and ownership and registration were linked so that ships
were registered in the country of the owner’s nationality (Metaxas, 1985; Goss, 1989;
Naess, 1972). The organisational dynamics, however, changed in the post-war decades,
due to the emergence of Open Registers which influenced the transformation of the
global ship registration ‘landscape’. Shipping companies henceforth ceased to be simply
‘local and operating internationally’ and transformed into ‘truly’ globalised business
entities with the ability to move capital and operate freely across national borders. In the
process even the state lost its hitherto firm control on the economic activities of
shipping companies. Ships were no longer necessarily nationally owned, crewed or
registered because ship-owners were free to decide on these matters without state
interference (Alderton et al, 2004). The nationality link in shipping business has,
therefore, been systematically undermined and eliminated by the developments of the
past five decades.
The highly globalised nature of shipping is mostly lost in the literature because of the
tendency, by some authors, to present and equate globalisation with ‘being global’.
Dunning (1993) for example defines global industries as:
Those that are dominated by large corporations with diverse national

origins, producing and marketing in all of the world’s largest economies
(1993:40)
This presents a ‘globalist’ view and implies that the criteria for globalisation include
size and global spread. As I indicated earlier, however, the definition of globalisation
that this thesis promotes relates to transborder economic activity without state
restriction (Scholte, 2000) and represents an on- going process rather than an outcome
(Sampson and Kahveci, forthcoming).
The thesis, therefore, contests the tendency to define globalisation in terms of globalism
and universalism as in Reiser and Davies (1944:39). More accurately, the suggestion
here is that globalisation should be considered and defined as a highly complex and
dynamic socio-economic process driven by the transborder activities of business
enterprises and the power struggle between markets and states (Beck, 2005; Wolf,
2005). Globalisation is a process of deterritorialisation of economic activities as defined
by Scholte (2000) and Held et al (1999) rather than the outcome of it (see Sampson,
2003; Sampson and Schroeder, 2006), as implied by Dunning’s (1993) globalism
- 31 -
definition. If we take globalisation as a theory of current and on- going changes in the
world economy rather than an outcome then it becomes easier and makes sense to
analyse the evolving and changing relationship between states and markets over the past
four decades which, Scholte identifies as the latest and most radical phase of economic
globalisation, and which, coincides with the period of rapid growth in the transborder
activities of multinational enterprises (2000).
The omission of shipping from the globalisation literature, though surprising, is not
intentional but seemingly due to the prevalent globalism view taken by many
globalisation commentators (e.g. Reiser and Davies, 1944; Ohmae, 1990; Dunning,
1993). This view is, however, distinctly different from that taken by commentators
within the maritime sector; many of whom view globalisation and developments in
shipping as part of the wider on-going processes shaping the world economic order
(Goss, 1989; Alderton and Winchester, 2002; Klikauer, 2003; Sampson, 2003; Veiga et
al, 2004; Sampson and Bloor, 2007).
It is important, at this point, to closely examine the features described above which
foreground shipping and make it one of the most globalised industries. It has been
pointed out previously that the three developments, in the 20th century, which catapulted
the industry to great heights of globalisation, within the short period between 1950s and
1990s include; the growth of Open Registers, growth of the Seafarers’ Global Labour
Market (Wu, 2004), and, the establishment of global satellite ship management
companies (Klikauer, 2003). Sletmo and Holste (1993) have demonstrated that the
definitive globalising development is the advent of ORs, as early as the 1920s (See also
Metaxas, 1985). It is this feature that accelerated the deregulation of both shipping
capital and seafaring labour world-wide and intensified the industry’s transborder
operations (Goss, 1989; Sampson, 2003; Sampson and Schroeder, 2006; Sampson and
Bloor, 2007). Giddens (2002) and others (see Stiglitz, 2002) have argued that the
process of globalisation took a decisive shift in the second half of the 20th century due to
enhanced telecommunication technologies which boosted transborder economic
integration and economic activity. In the shipping industry the establishment of Open
Registers as an additional globalising element meant that the process was clearer and
quicker than in other, land-based, industries (developed further in the next chapter).
- 32 -
As said earlier, another important part of this process of globalisation in shipping has
been the emergence of a distinct Seafarers Global Labour Market (Wu, 2003, 2004) as a
result of companies’ acquired ability to develop, organise and move labour across
national borders using satellite crew management companies (Klikauer, 2003).
International, third-party management companies, which emerged in the mid-1990s,
have helped propel the global activities of shipping companies even further. Because of
these companies, which include, commercial, technical and manning agencies (Spruyt,
1994; Klikauer, 2003), even the smallest shipping company anywhere in the world is
able to effectively operate in the global shipping market. They have provided ship-
owners with an effective global management solution to labour supply, and commercial
and technical management, by introducing and refining the concept of offshore
management whereby companies rely on offshore companies to staff and manage their
companies. Many of these offshore management companies are located in low-cost
countries, for example, Cyprus (Klikauer, 2003). By this development, shipping
corporations have become even more detached from national states than those in land-
based industries, like manufacturing, whose management is still largely in- house.
Shipping companies therefore enjoy a unique kind of freedom from states and national
borders because of these three prominent features which do not exist in many other
industries (Klikauer, 2003; Sampson and Schroeder, 2006).
This brief analysis of globalisation suggests that, in the context of shipping business,
globalisation has been, and continues to be, a dynamic and continuous process of power
negotiation between shipping corporate business and states. Shipping capital has, over
the years, effectively broken through the confines of state economic barriers and,
because of the socio-economic importance attached to shipping, as described earlier,
states have been forced to reconfigure their position and renegotiate the relationship in
order to gain and/or retain the benefits of global shipping. This is evident in the way
states have responded to the growing mobility of capital and the subsequent decline in
national shipping industries using various policy strategies.
2.4 States, Markets and Labour in a Globalised Economy

The discussion in the preceding sections has set the stage for a more in-depth analysis of
the relationship between states, capital and labour which forms the subject of this
section. The analysis of the shipping industry as a unique example of globalisation
- 33 -
raises important questions about what globalisation is and how it impacts on national
states. In this section I will examine the relationship between states, capital markets and
labour and discuss how it has changed as a result of globalisation over the past three to
four decades.
The relationship between national states and markets has been transformed over the past
four decades as a result of globalisation. In pursuance of neoliberal ideologies and the
promotion of free markets and due to growing pressure from global corporate capital,
many states have eliminated most of the economic barriers which formerly restricted the
free movement of capital, trade and finance globally (Hall, 2003; Harvey, 2005).
Whereas in the first half of the 20th century many countries used protectionist tactics
and saw import substitution as the most effective way to accumulate wealth and build
their national economies, the second half saw a changed ‘playground’ on which global
capital markets grew in power and, in turn drove the development agenda of most states
(Chomsky, 1999; Harvey, 2005). The state today is therefore very different from the
state half a century ago which was in control of, and effectively exercised regulation
over, economic activity within its borders. The state today appears to have lost much of
its regulatory capacity as borders have become increasingly porous.
2.4.1 Neoliberalism, States and Capital

Neoliberalism is a theory of political economic practices that proposes that human well-
being can best be advanced by liberating individual entrepreneurial freedoms and skills
within an institutional framework characterised by strong private property rights, free
markets, and free trade. The role of the state is to create and preserve an institutional
framework appropriate to such practices (Harvey, 2005).
Harvey continues to say that, beyond creating the necessary structures to guarantee the
security and freedom of markets, the state should not intervene because any such
intervention would distort the market. The neoliberal ‘era’, beginning in the 1970s, has
been largely characterised by deregulation, privatisation and a near total withdrawal of
the state from key aspects of the marketplace (Jessop, 1994; Fairbrother and Rainnie,
2006). In this scenario, the state has increasingly become more of a facilitator of capital
market expansion and less of a market regulator. Essentially, neoliberalism seeks to free
national resources from social ties for easy exploitation by global capital corporations
(see Chomsky, 1999).
- 34 -
The relationship between states and capital is characterised by complexity and

ambiguity: clearly states need capital because within the neoliberal paradigm, national
economic growth can only be effectively achieved through practices that promote free
markets and allow global corporations to organise, develop and exploit resources
globally in order to generate and accumulate wealth. It is therefore, perhaps, as Beck
(2005) argues, a negotiated partnership in national development but one in which the
two parties are engaged in a constant and continuous game of domination and power
struggle. National governments, for example, seek to capture and maintain the gains of
global capital. For this to happen they are forced to succumb to the demands of
corporate businesses with regard to developing policies and introducing legislation
which enable them to effectively exploit national production factors cheaply and freely.
The relationship is, on one hand, very much a symbiotic one, especially where powerful
states within the OECD are concerned but, on the other, one of market dominance and
intimidation. According to Beck (2005), there are two types of neoliberal state: first,
those where international agencies actively promote neoliberal projects and ideas,
mostly in the developing world, and second, those that actively and voluntarily adopt
and promote neoliberal projects, mainly developed countries. Along the same lines,
Chomsky (1999) argues that the concept of free markets applies differently to different
states: powerful advanced states as well as weak and developing ones. The argument is
that advanced states, unlike developing ones, are in a better position to benefit from the
gains of global corporate capital businesses (Ho lton, 1998; Beck, 2005). In as much as
these corporations have great influence over states, they need states, especially
advanced ones, to provide the security and infrastructure to develop policies and enact
legislation which guarantee and ensure their freedoms. States, on the other hand, need
multinational businesses because of their role in wealth accumulation and national
economic development.
In this respect, it is important to note that the neoliberal ‘project’ and the concept of free
markets have been positively and actively promoted by the governments of strong states
like America and Britain. Over the past four decades these states have actively
supported the concept of a free market economy and thereby facilitated the global
expansion and growth of corporate capital by providing enabling infrastructure and
security (Dunning, 1993; Holton, 1998; Harvey, 2005). Such states have effectively
facilitated the corporate exploitation of resources around the world with the knowledge
- 35 -
that profits are repatriated back ‘home’. In this way, corporations guarantee the
prosperity and continued world economic dominance for these ‘home’ countries. These
states, in turn, provide the conditions for the successful and profitable operations of
corporations. It is no wonder, therefore, that over three quarters of the most powerful
global corporate giants are located within the most powerful states of the OECD
(Holton, 1998; Hirst and Thompson, 1999).
Generally, however, the impact of growing capital influence over states, as a result of
increased global mobility and the threat of capital flight has been remarkable. From the
1970s to the present, the influence of corporate capital on the policies of national
governments all over the world has increased. During this time ma ny governments, led
by America and Britain, have adopted some form of neoliberal ideology to drive their
development agenda (See Chomsky, 1999; Fourcade-Gourinchas and Babb, 2002;
Jessop, 2002; Hall, 2003; Jonathan and Sally, 2004; Peck, 2004; Harvey 2005; Bohle,
2006).
In the process many key government economic policies are influenced more by the
capital agenda and less by the social agenda in what is viewed, by some globalisation
analysts, as the retreat of the nation state (Wallace, 1994; Strange 1996). These analysts
suggest that governments have lost authority over their societies and economies to
global corporate capital. Holton (1998), for example, argues that the state is no longer in
a position to effectively perform its traditional duties like protecting domestic
employment and guarding state sovereignty. Some analysts, on the other hand, view this
development as a negotiated arrangement in which governments and capital are in a
mutually beneficial relationship (Beck, 2005; Wolf, 2005).
Whether a ‘retreat’ or ‘negotiated arrangement’ the nation state has certainly undergone
tremendous change and its capacity to regulate corporate business activities has
declined. What comes out clearly in the literature is the fact that state policy, for
example in Europe, in the past three decades, has been more pro-capital and less pro-
labour (Hall, 2003; Harvey, 2005). This has, for example, led to the so called
‘modernisation of the welfare state’ which has transferred many traditional functions of
the state to the private sector hence, further enhancing the power of private corporate
capital. Susan Strange (1996:4), for example, observes that “where states were once the
- 36 -
masters of markets, now it is the markets which, on many crucial issues, are the masters
of the governments of states” (see also Clarke, 2005; Clark et al, 2006).
The UK shipping industry example is of interest in this analysis because it highlights

the way in which states have over the years responded to the globalisation of industry
and growing capital mobility with policy measures. The consequence of such responses
has been to create a situation of deregulation in both capital and labour markets which
has further enhanced what Beck (2005:127) refers to as the ‘coercive character of
capital’. During the second half of the 20th century, for example, the ability of shipping
capital to influence state policies in favour of cross-border business activities grew
tremendously with the consequence that shipping companies have been able to
influence a process of deregulation unequalled in any other industry. The government’s
response to declining tonnage and seafaring labour, and the form of its strategy and its
impact, provide a good illustration of the state’s effectiveness in controlling the trans-
border activities of Transnational Corporations and protect domestic industries.
2.4.2 Neoliberalism, States and Labour

One of the consequences of adopting neoliberal ideologies, as I have pointed out, is that
the state has been pushed back from the front- line of economic management and social
provision so that markets have gained a free hand to organise and develop production
resources. Beck (2005: xv) observes that “what is taking place (…) is a creative self
destruction of the nation-state-dominated ‘legitimate’ world order” in which there has
been, as Harvey (2005:3) adds, “much creative destruction …of prior institutional
frameworks and powers … [and] divisions of labour, social relations, welfare
provisions” etc.
One particular socio-economic function from which the state has completely withdrawn
and let the market take over, is the protection of national employment. The strength of
organised labour has been systematically dismantled at the insistence of capital in a
process whereby, according to the neoliberal thesis, markets intervene to free labour
from traditional strangulations of organisations such as unions (Harvey 2005). In the
process of promoting free markets, organised labour obviously presents a problem
because it empowers workers and makes them both expensive and difficult to exploit.
Being one the most important production factors, labour has ‘had to be’ contained as,
such a situation could not be tolerated by corporate capital. Therefore, one of the first
- 37 -
tasks for capital in the neoliberal era was to dismantle all forms organised labour. This
has been achieved by exerting pressure on national governments to adopt pro-capital
policies and introduce the necessary legislation (Harvey, 2005; Hall, 2003). What this
means is that it has not been enough for strong states to simply supply the conditions to
‘harbour’ Transnational Corporations (TNC), they also need to encourage
manufacturing and production via the provision of cheap labour (see Chomsky, 1999).
Neoliberal states like the UK, under Tha tcher, actively supported such policies as a
means of encouraging growth in capital investment. To facilitate easy exploitation
workers had to be under the absolute command and control of employers rather than
unions hence, such governments, since the 1970s, withdrew support for workers and
unions and introduced legislation which undermined organised labour and the power of
workers (Chomsky, 1999; Hall, 2003; Harvey, 2005). Those countries which already
had strong labour laws and powerful labour movements like the UK systematically
dismantled them while those that did not were never given the chance to develop any
(see also Smith, 1995; Jessop, 2002, 2003; Clarke, 2006). In the case of the latter,
corporate capital eliminated such possibility by tactically employing the threat of capital
flight (Clarke et al, 2006). In this way labour all over the world has been left open to
capital exploitation without the protection of national governments. The decline in the
British labour movement since late 1970s presents a good example which demonstrates
how a combination of growing employer power and the withdrawal of state support led
to a drastic decline in union power and the subsequent decline in the UK labour market
as a result of being left open to uneven international competition (Farnham and Giles,
1995; Wood et al, 2002).
In general terms trade unions in the UK were undermined in the late 1970s under
Thatcher’s policy of abandoning full employment and deregulating labour markets in
pursuance of the neoliberal id eology (Fairbrother and Yates, 2003; Hall, 2003; Hyman,
2005a and b). Their decline, both in membership and bargaining capacity was
accelerated by the recession of the 1980s and by the fact that, as from the 1970s, many
manufacturing industries such as steel, automobile, coal, as well as those in the
transport sector like shipping, were in decline resulting in employment loss (Cully et al,
1999; Farnham and Giles, 1995; Machin, 2000; Dundon, 2002; Wood et al, 2002).
- 38 -
Unions at this time also faced pressure from an increasing anti- union environment that
was promoted by employers utilising their increasing capacity to influence government
policy. Fairbrother and Yates (2003:1) observe,
Employers in all five countries [USA, UK, New Zealand, Canada and
Australia], albeit in varying degrees, have responded to the economic
instability beginning in the early 1970s and continuing into the 1980s by
shifting the balance of power in their favour, thus taking the opportunity
either to rid their workplaces of unions or undermine union influence.
Employers have been helped in these endeavours by governments choosing
to restore economic competitiveness through the advancement of neoliberal
policies, in part aimed at restricting union political and economic influence.
This is the situation that seafarers’ unions were facing in the 1970s and 1980s. In
response to massive flagging-out by British ship-owners and the decline in the UK
register, the government, keen to prevent further decline, facilitated the shift in the
balance of power from seafarers to owners. The government further succumbed to
pressure, especially from ship-owners, and introduced legislation which deregulated the
seafarer labour market in the UK and guaranteed ship-owners freedom to employ
foreign crews (Brownrigg et al, 2001; Selkou and Roe, 2002).
Thatcher’s declaration that her government had ‘tamed the unions’ is important because
it signalled the pro-corporate capital/anti- labour government stance that has prevailed
since then and led to the decline in local labour markets in the UK (Schifferes, 2004).
With the coming to power of the New Labour government, however, open attacks, on
unions, ha ve decreased and union recognition is being encouraged through the
introduction of the statutory union recognition procedure in 2000 (Wood et al, 2002).
However, the 1990s unions are very different and far less powerful than the 1970s
unions (Fairbrother, 2000; Levésque and Murray, 2006; Waddington, 2006). In the
seafarer labour case, for example, whereas unions like Nautilus-UK have gained favour
with the labour government within the past decade, they certainly have not gained the
capacity to effectively influence favourable policy (see Levésque and Murray, 2002).
However, the seafarers’ union case is special because of the existence of elaborate and
largely effective global collective bargaining machinery through the International
Transport Workers Federation (ITF) which presents a united and strong front against
companies with FoC vessels in the fight for better wage s and living and working
conditions for seafarers (Lillie, 2004, 2006). At local levels though, seafarers unions are
also caught in the same situation of limited capacity and influence as all the others and,
- 39 -
although the ITF presents a good example of global collective bargaining, its functions
are clearly different to those of local unions hence it is not in a position to provide the
answer to the problems facing individual local unions.
The limitations facing unions in the neoliberal era seem to have give n rise to a new
‘breed’ of union which work in partnership with corporate employers rather than
opposing their exploitation of labour because, essentially, their continued existence in
the current, highly capital dominated atmosphere is guaranteed by the corporate
community (Hyman, 1994; Kelly, 1997; Gall, 2003). Gall observes that although “the
issue of union recognition has returned to the top of the industrial relations agenda in
Britain, so too has the issue of employer opposition to it” (2003:79). A good example is
the statutory union recognition procedures, referred to above, whose legal design
suggests that, without corporate endorsement, unions cannot achieve any meaningful
recognition. According to union analysts (e.g. Kelly, 1997) unions have large ly been
integrated into the neoliberal system, through partnership with corporate employers,
such that they no longer possess the militancy necessary to effectively mobilise and
oppose employer exploitation or challenge anti- labour government policies (Hyman,
2005a).
Instead of fighting the corporate community in order to protect and promote local labour
markets, it seems as if unions, since the late 1990s, have been more concerned with
consolidating their existing membership and capacity. This is partly because of the
overwhelming strength of capital and the lack of government backing for local labour
markets.
One way in which unions are trying to enhance their capacity is through cross- industry
mergers and cross-border consolidation (Fairbrother, 2000; Waddington, 2006;
Fairbrother and Rainnie, 2006). There has been an increasing trend towards union
merger since the late 1990s both regional and across sectors. Examples of this include
the merger between the National and Provincial Building Society Staff Association
(NAPSA) and the Banking, Insurance and Finance Union (BIFU) in July 1997 (Gilman,
1997). A survey of trade union mergers in the UK and Germany found that the number
of individual trade unions in the two countries has significantly reduced since the late
1990s as a result of mergers (Waddington et al, 2003). The study also indicates that the
main reasons presented by proponents of union restructuring through mergers include:
- 40 -
…the reductions in inter- union competition, the possibility of greater

influence with employers and the state, and the better membership services
that result from post- merger economies of scale (p. iv).
Membership decline is also given as one of the major factors influencing unions to
merge. Because of this the report concludes that the move is largely defensive:
The merger processes examined here were dominated by defensive issues

rather than the search for potential benefits. For the majority of the unions
involved in the four merger processes, membership decline was a central
factor. Also, despite the introduction of extensive cost-cutting measures,
several unions were unable to reduce costs to match the decline in income
from members. Financial difficulties were widespread (p. iv).
In the same way, increasing seafarer employe rs’ power over seafaring labour, seemingly
backed by government, has forced unions into a generally defensive rather than
offensive mode which makes it difficult for them to influence the kind of policy and
strategies that might benefit British junior officers and ensure an effective recovery of
the pool of British officers. The on-going negotiations towards a merger between
NUMAST of UK and the Netherlands’ officers’ union, which has so far led to the
formation of the Nautilus Federation (NF) and a change of name for the UK union to
Nautilus-UK, is a good example of this process of cross-border capacity consolidation.
According to Nautilus-UK officials, this is the beginning of a process which is intended
to culminate in the formation of a single union of officers and maritime professionals –
Nautilus – in 2009. The ultimate objective, according to union officials, is to create a
single union covering the EU region. According to one union official participating in
this study:
The aim is to build a bigger and stronger front capable of countering the
growing influence of employers in the shipping labour market-place”
[Union Interview].
The ITF is, perhaps, the best example of how individual national unions find strength in
international collective bargaining in the way it has attempted to organise and
consolidate the otherwise fragmented ‘voices’ of seafarers working on-board FoC
vessels in the fight for better wages and working conditions for seafarers (Lillie, 2006).
Cross-border union mergers are, however, not yet common, which makes the Nautilus
experiment unusual. The problem with this approach is that, whereas it might succeed in
consolidating and expanding membership and increasing ‘asset base’, it does not
- 41 -
necessarily translate into increased influence for local seafarers with employers and the
state. Also although the cross-border collective bargaining approach may attempt to
address seafarers’ issues at an international level such as wage rates and working
conditions, it is not able to tackle country-specific issues like loss of employment and
declining local labour markets, or even declining memberships. This is because the
focus is regional rather than national. Moreover, it does not enhance the capacity of
individual local unions to influence government policies and legislation favourable to
seafarers in their individual countries. According to the Anglo-German Foundation
Report cross- industry mergers do not seem to provide the answer to declining union
capacity at the national level:
[There is] little evidence to suggest that mergers are a satisfactory response
to such changes. More radical strategies are required if the British and
German union movements are to extend unionisation throughout the
expanding private-sector services (Waddington et al 2003:iv).
Because the ITF, for example, attempts to represent national unions from all over the
world, some of which have conflicting interests to each other in terms of wage
expectations, the federation is not in a position to effectively address local union-
specific problems. Some of the issues that the ITF finds difficult to address include
declining labour markets in some countries because it represents unions in developed as
well as developing countries. To try and protect employment for the OECD countries
that are faced with prolonged decline would mean working against the interests of new
labour supply countries and their local union affiliates. A move by the federation, in the
1970s, to standardise global crew wages using the OECD wage scale was interpreted by
unions from developing countries, notably India and China, as a deliberate attempt to
protect OECD seafaring jobs. This led to a crisis whereby the affiliates in Asia
threatened to pull out of the federation, a move that would have destroyed the ITF (see
Lillie, 2004). The ITF case therefore not only illustrates the possibilities of effective
global unionisation but also demonstrates the complex inter- union politics which
present a big challenge to international union organisation (Lillie, 2006).
2.5. Conclusion
The shipping industry provides a good case for study as an example of a truly globalised
industry. The historical developments within the industry and the global dynamics of its
operations present a good narrative of the changing relations between states, capital and
- 42 -
labour. It demonstrates the extent to which globalisation has influenced changes in the
state’s capacity to regulate economic activity and clearly demonstrates the dynamic and
continuous power struggle between states and capital markets.
The decline in UK shipping and the response of the British government presents an
excellent illustration of the state’s ambiguous position vis-à-vis capital and labour. The
next chapter examines the UK shipping industry in light of the processes of
globalisation discussed in this chapter. It traces the systematic deregulation of shipping
labour and capital as part of the wider neoliberal project but also highlights some of the
resulting challenges for both the state and the industry. The conception of the tonnage
tax, as the main strategy for responding to the decline in the industry, its design and
impact suggests that the government is in a dilemma. Having discussed the withdrawal
of state support for labour in this chapter, the question, with regard to the government’s
response to declining capital and labour in the UK shipping industry, is whether or not
the tonnage tax was designed to increase and protect the pool of qualified British
officers.
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CHAPTER THREE
The UK Tonnage Tax: A State Solution to Industry Problems
Introduction
Chapter two introduced the subject of decline in the shipping industries of Traditional
Maritime Nations (TMN) and briefly discussed the impact of globalisation on the
capacity of states to effectively manage domestic economies and protect local industries
and labour. In this chapter I will take a closer look at the impact of globalisation on
nation states with regard to the state’s response to the globalisation of the shipping
industry. I will specifically examine the decline of the UK shipping industry, between
the mid-1970s and late 1990s, and how it relates to the general processes of economic
globalisation and deregulation. I will also discuss the government’s response - the
tonnage tax - and assess its adequacy and effectiveness. Via the consideration of this
example the thesis will shed light upon the extent to which the state retains the capacity
to influence economic activities notwithstanding the process of economic globalisation.
The wave of decline in the shipping industries of TMNs was largely a consequence of
the growing mobility of shipping capital and the increasing popularity of Open
Registers among European ship-owners. This, as explained in chapter two, started with
the establishment of low-cost Open Registers with lax regulatory regimes in developing
countries around the world. The flags charged only a small registration and
administration fee, very low or no corporation tax and, more importantly, allowed ship-
owners to employ cheap foreign crews (Metaxas, 1985; Alderton and Winchester, 2002;
Marlow, 2002; Alderton et al, 2004). For this reason many owners moved the ir vessels
to Open Registers. Faced with this kind of competition and the threat of losing all their
tonnage to Open Registers, many TMNs went about systematically eliminating some of
the legislation associated with their own flags and opposed by shipping companies.
Countries like Denmark, Norway, the Netherlands and the UK, for example, established
‘second registers’ providing a more lax regulatory environment but operating as
subsidiaries of the parent register (Alderton et al, 2004). These countries also
systematically eliminated legislation which protected local seafarer employment like the
crew nationality requirements, which required that a certain percentage of crew must be
- 44 -
nationals. In this regulatory race to the bottom, as Desombre (2006) describes it,
shipping labour and capital became deregulated worldwide. It also led to a rapid and
drastic decline in the pools of seafarer labour in TMNs. As fleets declined, employment
opportunities for national seafarers declined because ship-owners preferred to employ
cheaper foreign crews. This also meant that training opportunities for cadets in these
countries declined.
The chapter will assess how the UK, as one of the states affected by this decline, has
responded by examining the design and nature of the UK tonnage tax as the main
government strategy for the shipping industry. The analysis will cover the conception,
design and implementation, of the strategy and examine its impact, to date. However,
before considering these themes, it is important to establish the appropriate contextual
background to all these developments. The chapter thus begins with a general analysis
of the process of deregula tion in shipping labour and capital in the 1970s and 1980s.
There are four sections in this chapter. Section one discusses the growth and influence
of Open Registers, their growth and role in the globalisation of shipping. Section two
briefly introduces and discusses the consequence of the decline in UK shipping between
the mid-1970s and late 1990s and examines its impact on the British maritime skills
base. The UK’s response to this decline is analysed in section three which details the
design and adoptio n of a comprehensive policy for British shipping and describes the
UK tonnage tax. It also provides a brief assessment of the impact of the strategy and
examines whether or not the government has been able to effectively respond and bring
about a reversal of the decline. Finally, section four concludes the chapter with a brief
conclusion.
3.1 Globalisation and Deregulation in the Shipping Industry

The three decades immediately following the Second World War – 1945 to 1972 are
often described as the golden age of economic growth and prosperity (see Stopford,
1997; Holton 1998). This period was characterised by, not only a steady growth in
international trade and expansion in the economies of industrialised states but also, as a
period of strong economic regulation by national states, economic protectionism and
strengthening of labour by states committed to promoting ‘full employment’ policies
(Armstrong et al, 1991; Kahveci and Nichols, 2006). However with the acceleration of
transnational interaction and transborder economic activity driven by the growth of
- 45 -
Transnational Corporations, since the 1960s, the global economic arena started
changing. States started competing to attract global ‘footloose’ capital thus setting in
motion a process of deregulation whe reby states sought to offer the most attractive
business atmosphere to multinational corporations (Modelski, 1972; Mckenzie and Lee,
1991; Dunning, 1993; Vogel and Kagan, 2004).
The process of deregulation was largely driven by the uneven economic development
between countries and regions and an uneven international regulatory terrain whereby,
advanced economies maintained stringent economic regulations whereas developing
countries less so. In the face of rising production costs and growing competition for
corporate enterprises, following the 1973 oil crisis and the economic crises of the 1970s,
many companies sought ‘commercial refuge’ in those countries with less stringent
regulations where they could reduce their operating costs by employing cheaper labour
and where they were required to pay less corporation tax.
Thus, from the mid-1970s, and progressively, until the end of the 20th century, advanced
states, in a bid to stop the flight of capital to the less regulated developing countries,
eliminated most of their strict employment regulations and introduced legislation which
undermined and reduced the power of organised labour (Harvey, 2005; Fairbrother and
Rainnie, 2006). In part, these policies aimed to stop many industries from shifting to
less regulated, low-cost countries. Some of the measures introduced by nation states
included the reduction of corporation tax rates, relaxation of immigration laws to allow
immigrant labour, introduction of legislation to facilitate easy transfer of finance
globally and a reduction of restrictions on the international mobility of capital. In
pursuit of neoliberal economic ideologies, which were taking root during this period,
many of the states abandoned social welfare and dropped their ‘full employment’
oriented policies (Chomsky, 1999; Harvey, 2005). Thus, by the turn of the century,
developed economies, such as America, Britain and France, had shifted from demand to
supply-side strategies and actively promoted capital accumulation and a market driven
economy at the expense of social welfare and full employment (Chomsky, 1999; Hall,
2003; Harvey 2005).
In this respect, the shipping industry lends itself to the analysis of the uneven global
regulatory field and the consequent economic deregulation of the 1970s and 1980s. The
relationship between states and shipping capital since the beginning of the 20th century
- 46 -
provides an excellent illustration of the impact of globalisation and the growing

influence of capital markets and the consequent, extensive, deregulation in what has
been termed, in some sections of the literature as a “race to the bottom” (Mckenzie and
Lee, 1991; Vogel and Kagan, 2004; DeSombre, 2006).
3.1.1 States and Shipping
For the purposes of analysing the international structure and dynamics of the shipping
industry, I categorise states into three broad types, namely, owner/flag states; flag-states
and labour supply states. The first category comprises, largely, Traditional Maritime
Nations (TMN). These are states whose shipping tradition goes back many centuries
and which dominated shipping, in terms of ownership, registration, manning and
operations, until the emergence of Open Registers in the early 20th century. They have
also been referred to as ‘embedded’ maritime states because of their extensive and
‘deep’ maritime regulatory structures and tradition (Alderton and Winchester, 2002).
Although since the mid-1970s these states have gradually lost most of their fleets to
foreign flags, as described in chapter two, the largest percentage, that is, over 68%, of
ship-owners are nationals of OECD countries which includes most TMNs (see figure 4,
ISL Market Statistics, 2005).
The second category of flag states consists largely of Open Registers. As I have already
explained in chapter two, this category emerged in the early 20th century with the
establishment of Panama and Liberia in 1922 and 1948 respectively. They are often
established in small developing economies with little international, political or
economic, influence and, in some cases, no prior existing maritime tradition (Metaxas,
1985; Alderton and Winchester, 2002; Coles, 2002). The countries establishing them do
so for largely commercial reasons and aim to attract as many vessels as possible in order
to maximise the amount of revenue they can collect through the registration and
administration fees they charge and in some cases, the little corporation tax they impose.
Circumstances during the mid-war years and immediately following the Second World
War period created ‘fertile’ ground for the mushrooming of Open Registers and their
rise to prominence as popular destinations for, hitherto, TMN tonnage. Some of the
factors responsible for this include: an oversupply of ships from the war; rising
operating costs for ship-owners; increasing competition among operators, and;
restrictive state regulations. These factors prompted many owners to ‘flag out’ their
- 47 -
ships from traditional registers to the new Open Registers in order to cut costs and
remain competitive (Metaxas, 1985; Alderton and Winchester, 2002; DeSombre, 2006;
Kahveci and Nichols, 2006; Lillie, 2006).
The final category consists of states which, though neither Open Register nor TMN,
play some role in ship registration but mostly they have, in the past three decades, come
to play an important role as the main source of seafaring labour for the global fleet.
They include countries like China and India which have large national fleets but are not
considered TMNs possibly because, although they have long maritime histories, their
ownership and control of a significant proportion of global shipping capital is both
recent and limited as compared to, for example, the maritime nations of the OECD.
They are however mostly known for their role as sources of seafaring labour and they
rose to prominence, in this role, in the mid 20th century when ship-owners from around
the world, especially from industrialised high-cost countries, were searching for cheaper
sources of seafaring labour in order to reduce ship operating costs. The answer was
found in lo w-wage developing countries with abundant skilled labour such as India and
the Philippines. The category has since expanded to include most of the developing
world, including Africa, Asia, and Eastern Europe.
The emerging global structure of the industry is, therefore, one in which ships are
largely owned in the advanced OECD states while registration and manning functions
are shared between developing countries though not exclusively because TMNs still
continue to play an important albeit reduced role in ship registration. Although there are
states which have almost exclusively specialised in the registration market, like Panama,
Liberia and Bahamas, there are some that specialise in both registration and crewing
markets like the Philippines which, just like China and India, has a large national fleet
but is not considered a TMN. The implication of this international organisation of the
industry on the capacity of the state to effectively regulate and control the activities of
shipping multinational businesses will become clear later in the chapter as I continue to
examine and discuss the deregulation of shipping capital and labour. Shipping plays a
central role in international trade and by extension the prosperity of all nations but,
while its significance in this respect is seldom acknowledged and easily taken- for-
granted by many nations of the world, its importance borders on nostalgic reverence for
those nations with embedded maritime traditions, that is, the Traditional Maritime
Nations. The importance of the industry, long after the wars and the conquests, derives
- 48 -
from not just trade and economic prosperity, but also national pride. To the New
Maritime Nations, however, the relationship is purely economic.
Many states therefore harbour an interest in the shipping industry because of its
commercial benefits such as the revenue it generates and the employment opportunities
it creates within the economy. The method that states use to protect and enhance their
interests in any valuable industry is, and has always been, some form of state protection.
It is however a method which, as McConville (1999) argues, in the shipping industry, is
inherently problematic. This is because of the international ‘buoyancy’ of shipping
capital and the fear of ‘tonnage flight’ by maritime states. This has become more
pronounced in the past few decades due to increasing economic globalisation. The
problem arises from the dilemma which McConville (1999:78) describes as ‘the
juxtaposition of competing interests of an international service industry and its
operation within the system based on nation-states’ whereby states would like to contain
the gains of shipping businesses within their economies by limiting their ability to freely
move capital and finance internationally but are prevented by the fear of capital flight
(see also Kovats, 2006).
Unlike other industries, shipping is, and has always been, international. Over the years it
has evolved and developed a set of complex global relationships which make it one of
the most globalised industries. This complex international character has implications for
the capacity of individual states to effectively manage the transborder activities of
shipping companies and maximise the retention of their benefits domestically. This is
made even more difficult by the fact that the nationality of ships and shipping
companies is often vague and fictitious (Alderton et al, 2004; DeSombre, 2006; Lillie,
2006). As Kahveci and Nichols (2006:18) observe, ship-owners can change the
nationality and, effectively, the relevance of a regulatory regime by “engaging in
fictitious capital export [and] altering the registration of their vessels”
The relationship between states and transnational shipping companies is a complex one.
It clearly illustrates Beck’s argument that states and capital are engaged in a continuous
process of power reconfiguration (Beck, 2005). Clearly ships need states to register
them and give them the legal identity necessary for international commercial activity
(Coles, 2002) hence shipping companies seek those states which offer the friendliest
commercial atmosphere. At the same time states need the companies for the commercial
- 49 -
and economic benefits which come with large national fleets and strong domestic
shipping industries. Inevitably, therefore, the two are caught in this complex web of
negotiation.
3.1.2 20th Century Open Registers
The practice of operating ships under foreign flags existed long before the 20th century.
Changing ships’ flags can indeed be traced back to the beginning of the eighteenth
century (Metaxas, 1985; Coles, 2002). However, the practice differs significantly
between the pre and post 20th century in terms of purpose and motivation. Flagging out
in pre-20th century was mostly for political and military reasons rather than economic
ones (Alderton and Winchester, 2002). Ship-owners were then interested in forging
close alliances with powerful states for strategic reasons. Furthermore, the change of
ships’ flags then was mostly influenced by the states, because of the military and
economic might that came with command of large national fleets (Metaxas, 1985).
In contrast, the reasons for changing flags in the 20th century, are purely economic and
the decision no longer lies with the state. Modern Open Registers grew as part of the
process of globalisation in the shipping industry. The practice of changing flags is now
solely market driven. Instead of seeking the protection of states, now shipping
companies aim to escape the rigid and commercially strangulating control of the state
(Naess, 1972; Carlisle, 1981; Metaxas, 1985; Alderton and Winchester, 2002; Alderton
et al, 2004). From being a strictly regulated and state protected industry, shipping has
therefore transformed into a globalised industry with highly mobile and deregulated
capital.
Open Registers, therefore, form an important part of the history of the shipping industry
and are a significant feature of its international structure and dynamics. Looking at the
history and role of Open Registers in shipping, it is correct to say that globalisation in
the shipping industry precedes that of other industries in the sense that shipping capital
and labour started enjoying the freedom of cross-border mobility as early as the first
two decades of the 20th century (Carlisle, 1981; Metaxas, 1985; Kahveci and Nichols,
2006). Furthermore, the primary defining features of a globalised industry, that is, the
international mobility of capital, finance and labour, which, in many shore-based
industries emerged after the 1960s, existed, in the shipping industry, long before the
20th century.
- 50 -
There are many ways of defining Open Registers depending on one’s view of their role
in global shipping. The International Transport Workers Federation (ITF), for example,
has a particular way of defining them which has influenced the industry’s view of these
flags for the past three decades. The federation, in its fight against the growth of flags
which promoted seafarer exploitation in the 1970s, coined the term Flags of
Convenience (FoC) to promote the idea that they played the role of harbouring
unscrupulous ship-owners and their ships which would not be accepted in any ‘decent’
register because of their poor record on safety, crew wages and working conditions. The
ITF’s defines Flags of Convenience as:
[Where] beneficial ownership and control of a vessel is found to be

elsewhere than in the country of the flag the vessel is flying (ITF, 1999).
This definition has influenced the way in which others define them. For example,
although Metaxas (1985) takes a more economic view of the role of 20th century Open
Registers, his definition is similar to that of the ITF. He defines them as:
National flags of those states with whom shipping firms register their
vessels with a view to maximising their private benefits and minimising
their private costs by avoiding the economic and other regulations and the
conditions and terms of employment of factors of production that would
have been applicable if their vessels were registered in the countries of their
national origin.
Similarly, Kahveci and Nichols (2006: 18) define them as “where there is no genuine
link between the flag state and the ships on its register”.
Another influential definition of Open Registers which preceded that of the ITF is
offered in the Rochdale Report (1970:51). The report offers a description of ORs in
which it identifies some of their key features. It states that Open registers are those
where:
(I) The country of registry allows ownership and/or control of its merchant vessels
by non-citizens.
(II) Access to the registry is easy. A ship may usually be registered at a consul’s
office abroad. [Transfer to other registers is not restricted at all]
(III) Taxes on income from the ships are either not levied locally or are low. A
registry fee and an annual fee, based on tonnage, are normally the only charges
- 51 -
made. A guarantee or acceptable understanding regarding future freedom from

taxation may be given.
(IV) The country of registry is a small power with no national requirements under
any foreseeable circumstances for all the ships registered, but receipts from very
small charges on a large tonnage may produce a substantial effect on its national
income and balance of payments.
(V) Manning of ships by non-nationals is freely permitted; and
(VI) The country of registry has neither the power nor the administrative machinery
to effectively impose any government or international regulations; nor has the
country the wish or power to control the companies themselves.
The definitions offered here highlight and emphasise the disparity between TMN and
Open Registry regimes with regard to cost and regulatory strength. The features
highlighted in the definitions form an important part of the discussion about
globalisation in shipping and the shape and effectiveness of state response.
As stated earlier, Open Registers in the 20th century started with the establishment of the
Panamanian flag in 1922 followed by the Liberian flag in 1948. The establishment of
the first, ever, official open register – Panama – can, actually, be accredited to the
United States and its prohibition laws in the inter-war period. The Volstead Act passed
in October 1919 banned the manufacture, transportation and consumption of any
alcoholic beverages in the US, including ships flying the US flag (Carlisle, 1981;
Metaxas, 1985). In 1922 United American Line switched flags to Panama in order to
circumvent the Volstead act and continue to sell alcohol on-board their ships (Johnson,
1996; Kahveci and Nichols, 2006) as did many other American owners. Labour costs in
the US were also high due to strict manning laws, but the greatest attraction to the
Panamanian register came with the signing of a joint treaty between the US and Panama
exempting shipping profits from taxation in Panama (Metaxas, 1985; Alderton and
Winchester, 2002; Carlisle, 1981). The “road to Panama” was soon joined by European
ship-owners led by Spanish ship-owners who flagged out in protest against social
reforms which had increased operating costs in Spain (Carlisle, 1981; Coles, 2002).
- 52 -
Another boost to the Panamanian flag came with the US Ship Sales Act of 1946 by
which 1,113 Liberty ships were sold to owners operating under foreign registers. The
US authorities felt that it was strategic to sell the ships to US ship-owners operating
under the Panamanian flag because the ships would continue to be available to the US
in case of need (Metaxas, 1985). The Panamanian register was then considered an
extension of the US national register because all the ships registered in the Panamanian
flag were owned by US companies (Carlisle, 1981; Metaxas, 1985; Alderton and
Winchester, 2002; Coles, 2002). Liberia, the second Open Register, joined the ‘flag
race’ in 1948 by introducing laws which made it easier and cheaper for ship-owners, to
register and operate vessels under its flag by creating an atmosphere of reduced
registration conditions, reduced taxes and the freedom to employ foreign crews (see
Carlisle, 1981). In the 1970s and 1980s Open Registers mushroomed and grew
everywhere, facilitating a massive shift in ship registration from TMNs such that, from
6% in 1950, the percentage of the world fleet, in terms of tonnage, under ORs sprang to
23% in 1983, 31% in 1985, 42% in 1990 and 50% in 1995. By 2000 56% of the total
world fleet, in terms of tonnage, was operating under Open Registers (UNCTAD, 2006).
A series of factors contributed to this development: first, the collapse of international

trade in 1930s reduced the amount of cargoes transported internationally and triggered a
recession in shipping. In order to survive the recession ship-owners started seeking
cheaper ways of running ships (Viner, 1937; Sturmey, 1962; Stopford, 1997). Second,
the closure of the Suez Canal in 1967 meant that bigger ships were required to traverse
round the Cape of Good Hope. Many ship-owners rushed to place orders for such ships,
especially crude oil tankers, such that, by the time the canal reopened in 1975, there was
an oversupply of tonnage. Third, the oil crises of 1973 and 1979 led to the overloading
of the ship ‘order book’ for big oil tankers because many of the oil companies decided
to acquire their own ships thus making the prevailing situation of oversupply worse.
Unfortunately, the 1979 oil price-rice also triggered a deep recession in sea-trade
causing the most severe decline in trade volume of the century (Stopford, 1997).
The fourth factor which facilitated the rapid growth of Open Registers during this
period was the availability of credit from banks. American and other western banks had
convinced some of the oil rich OPEC countries to channel their oil money through their
accounts (Harvey, 2005; Perkins, 2005) hence they found themselves with large sums of
surplus money. Since shipping was one of the industries growing steadily many
- 53 -
financial speculators obtained cheap loans and invested in ships. Some of the banks also
decided to invest in their own ships and there was a general rise in speculative
investment in shipping. At the same time, many maritime nations, in the 1960s and
1970s, were providing large loans and other financial incentives to shipping investors as
a way of boosting national shipping industries (Marlow et al, 1997; Stopford, 1997;
Marlow 2002).
All these developments exerted pressure on the shipping industry by creating an

oversupply of tonnage, particularly, in the 1970s and 1980s. Ships were being delivered
faster than they could be scrapped. Indeed, as Stopford (1997) observes, in some cases,
ships came straight from the building yard to the scrap yard because in the
circumstances of declining shipping markets prevailing at the time, it was more
profitable for the owner to scrap the new ship than entering the overcrowded market.
Unfortunately, the scrap market was also in decline due to a slump in the steel ma rket
and the increase in the demand for scrapping (Stopford, 1997). Soon after the oil crisis
in 1971 oil companies also decided to dispose of their owned fleets and rely on the open
market which was much cheaper than operating own ships. The industry was stuck with
more tonnage than required (Stopford, 1997). Hence, from the mid-1970s to mid-1980s
there was a huge oversupply of tonnage which triggered a drastic decline in shipping
markets that pushed many operators out of business. Those ship-owners who survived
desperately needed to reduce operating costs in order to survive and remain competitive
(Marlow, 2002). Open Registers offered this opportunity because, through them and
their lax regulatory regimes, ship-owners could manipulate and reduce cost to their
advantage. As an increasing number of European ship-owners sought cost refuge in
ORs, the fleets of European maritime countries rapidly declined. By the mid-1990s
TMNs registered only a very small percentage of the total world fleet as shown earlier.
The following graph show the huge decline in TMN fleets between early 1950s until the
late 1990s:
- 54 -
Figure 6: Top Eight TMNs 1948 - 2000
Registration Trends for Top Ten Maritime Nations

1948 - 2000
50
Gross(Mil)Tonnage
40
Fr
30 Ger
NL
20
Italy
Jap
10
Nor
0 UK
1948
1952
1956
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
US
Year
Source: Lloyd’s Register-Fairplay: World Fleet Statistics (1948 - 2000)
While the fleets of the top ten TMNs were in rapid decline, the fleets of the top seven
Open Registers were rapid ly expanding, as shown in the figure below:
Figure 7: Top Seven Open Registers 1948 – 2000
Top Seven FOCs 1948 - 2000
140
Gross (Mil) Tonnage
120
Bah
100
Cyp
80 Lib
60 Mal
40 Hon
20 Pan
0 Phil
1948
1952
1956
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
Year
Source: Lloyd’s Register-Fairplay: World Fleet Statistics (1948 - 2000)
Clearly, by the 1990s, the largest percentage of the world fleet operated from
developing country-ORs. This had huge implications for the regulation of shipping.
- 55 -
3.1.3 The Deregulatory Impact of Open Registers

The establishment of Open Registers, in the early decades of the 20th century, was,
clearly, a significant turning point in the history of the shipping industry world-wide. It
triggered a process which, within four decades, completely transformed the international
face of shipping. At the beginning of the 20th century, the industry was largely
concentrated in a few industrialised flag-states (discounting the largely local and
traditional industries of a few developing countries like India and China). Within a few
decades, however, it had transformed into a highly complex and globalised one.
Throughout the 1960s, 1970s and 1980s many countries set up ORs as the competition
for the ship registration market intensified and many ship-owners responded by flagging
out increasing amounts of tonnage from traditional flags. By the late 1990s, ORs were
home to more than 51% of the total world fleet in tonnage terms (Alderton and
Winchester, 2002; Kahveci and Nichols, 2006).
The main reason behind the exodus of tonnage from traditional flags to ORs, especially
in the 1970s and 1980s, was, as suggested previously, a combination of increasing ship
operation costs, growing competition and the rigid regulatory regimes of traditional
flag-states which made it difficult for ship-owners to compete with their counterparts
operating under ORs (Goss, 1989; Stopford, 1997; Marlow, 2002; Alderton et al, 2004).
One particular aspect of regulation which influenced many ship-owners’ decision to

leave traditional flags, such as the UK, was the requirement that crews should comprise
nationals of the flag-state, that is, the crew nationality requirements imposed by most
TMNs. Until the mid-1990s, the requirement by the Danish, German and Italian flags,
for example, was that all seafarers working on-board their ships must be nationals.
Before the introduction of mechanis ing innovations on board ships, shipping was a
highly labour intensive business and up until the 1980s ships still required a large
number of people on-board. Crewing costs therefore formed one of the largest cost
items for ship-owners. At the same time, it was the most variable of all cost items and
therefore provided a way for ship-owners to adjust their costs; the chance to reduce this
heavy bill by employing cheaper crews from low wage countries was a life-line for
many companies who were struggling in the international market (Marlow, 2002).
Since the strict regulatory regimes of most traditional flags did not allow ship-owners to
utilise this advantage, many ship-owners saw re-registration with Open Registers as the
- 56 -
best available option. Furthermore, by choosing to operate under ORs, ship-owners

avoided paying most, if not all, social security related costs thereby reducing non-wage
crewing costs. Generally, these flags enabled ship-owners to reduce their total operation
costs through:
Tax avoidance, transfer pricing, trade union avoidance, recruitment of non-

domiciled seafarers and passport holders for very low wage rates , non-
payment of social security contributions for their crews and avoidance of
strictly applied safety and environmental standards (ITF, 1999:72 cited in
Kahveci and Nichols, 2006).
What the open registry system, therefore, did, and still continues to do, is to allow
shipping multinationals to successfully avoid the state regulatory machinery of TMNs
and render the barriers to unlimited international labour mobility imposed by national
governments ineffective. It allowed ship-owners to freely choose the nationality of their
ships and operate freely across national borders.
The establishment and rapid growth of ORs intensified competition between flag-states
and placed traditional flag-states in a highly ambiguous position and under pressure. In
the face of declining national fleets these states were faced with the dilemma of whether
to maintain their strict regulatory approach and lose all their fleets to ORs or relax their
regulations, especially on crew nationality, registration conditions and taxation rates,
and retain some of their fleets. Many TMNs were forced to carefully reconsider their
options and gradually relaxed their rigid regulatory stance in order to counter the rapidly
growing advantage of their competitors. Some of the regulations that were either
abandoned or relaxed included crew nationality requirements, strict registration
conditions and a reduction in taxation on shipping profits.
Many of the traditional flag-states relaxed the requirements on register entry and exit
that formerly distinguished them (‘closed’ registers) from open registers. Furthermore,
many of these states tried to create a more attractive business atmosphere by introducing
‘friendlier’ tax regimes as demonstrated by the various ‘tonnage tax clones’ which have
been in operation around the world since the 1970s. With regard to crew nationality,
which was perhaps the biggest ‘bone of contention’ between ship-owners and flag states,
some states, like the UK, completely eliminated the requirement that crews be (British)
nationals while others, like Germany, Denmark, Holland and Norway reduced the
- 57 -
requirement for nationals and made it applicable to either only the master or most of the
senior officers.
Another significant development which transformed the global shipping ‘terrain’ was
the establishment of second and international registers. As stated earlier these registers
were established by countries such as the UK, Norway, Denmark and Germany either
within their national borders or in an offshore location in countries with which they had
political and historical ties. The regulatory conditions imposed by these registers
resemble those of Open Registers, with regard to crew nationality requirements,
taxation rates, and entry and exit conditions. They are, however, governed by the laws
of the ‘parent’ flag-state and operate in parallel with the ‘first’ register. Their ships fly
the flag of the ‘parent ’ flag-state. Examples of such registers include the Isle of Man
which was created by the UK and operates in parallel with the British (first) register,
the Danish International Register of Shipping (DIS), the German International Register
of Shipping (GIS), the Netherlands Antilles, the Norwegian International Register of
Shipping (NIS), and the Canary Islands (see Alderton et al, 2004). The aim of
establishing these alternative registers was to divert the flow of tonnage from Open
Registers so that, through them, TMNs could retain more vessels which would
otherwise go to ORs. These registers grew popular because they effectively offered the
‘best of both ship registration worlds’. In such a competitive atmosphere where stronger
national regulations undermine the competitiveness of domiciled businesses, the
possible consequence is a regulatory race-to-the-bottom (Wolf, 2005). Where this
pattern is evident, it can lead to the gradual watering down of national regulations in a
downward adjustment process. The 1970s and 1980s in the shipping industry is perhaps
the best example of such adjustment which culminated in a situation whereby shipping
multinationals operate in a near regulation free atmosphere. It has also led to the growth
of a highly deregulated Global Labour Market for seafarers (Wu, 2004) in which
employers have unrestricted access to a wide range of seafarers from many different
nationalities at very low prices determined by ‘open’ market forces.
3.2 Decline in the UK Shipping Industry

The UK experienced a significant decline in its shipping industry, between the mid-
1970s and late 1990s. The UK registered fleet fell from 33.1 million GT (3,822) in 1975
to 3.4 million GT (1,391 ships) by 1997 as evident from the figure below:
- 58 -
Figure 8: UK Gross Registered Tonnage 1970 - 1999
UK Gross Registered Tonnage 1970 - 1999

Gross (Mil) Tonnes
40
30
20
10
0
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
Year
Source: Lloyd’s Register-Fairplay: World Fleet Statistics (1970 – 1998)
During the same general period the number of British qualified officers dropped from
28,000 in 1980 to 17,000 in 1998 according to UK Chamber of Shipping data (1996)
and House of Commons Fleet and Manpower Inquiry (HoC, 1993, see also Obando-
Rojas, 1999).
By the mid-1990s it was clear that this decline was threatening the entire UK maritime
sector. The decline in the UK fleet combined with the decline in the number of qualified
British officers threatened the shore-side maritime cluster of firms which rely on the
transfer of essential skills from the sea to fill sensitive technical positions in shore-side
operations like ports and harbours, ship surveying and insurance, ship management, and
maritime law (Gardner and Pettit, 1996; 1999). The possibility that some of these firms
could cease trading while others could shift their operations to overseas destinations, as
a result of skills shortage, became real by the mid-1990s. Furthermore, the decline in the
fleet also meant that the country’s training capacity was reduced since seafarers were
traditionally trained by domiciled shipping companies.
3.2.1 Impact on British Maritime Skills
Diminishing skills in the UK maritime sector came as a direct consequence of the many
years of decline in the UK fleet and local seafaring labour. Within the maritime sector,
the shipping industry forms the core thrust and basic catalyst for all the other maritime
related industries. Growth or decline in shipping activities, therefore, automatically
influences fluctuations in the entire sector.
- 59 -
Traditionally, seafaring training in the UK followed an informal system of

apprenticeship whereby trainee seafarers were attached to, and worked with, master
mariners and chief engineers, at sea, to acquire the necessary skills and experience.
Even with the changes in the training structure into the modern, formal cadet schemes
involving phases of theory-based classroom instruction and advanced training models
and simulators, the basic concept of ship-board apprenticeship continued and the ship-
owner still carried a significant responsibility in the training of cadets. In the traditional
system, therefore (the basics of which the UK still maintains), ship-owners not only
recruited cadets but also financially supported their training and provided training berths
for practical sea training.
The impact of the declining fleet on cadet training was that the UK’s training capacity
reduced drastically because British ship-owners operating under foreign flags were not
obliged to train British officers and therefore there was a reduction in training berths
and general sponsorship for cadets. British ship-owners relied on cheaper foreign crews
and therefore reduced their training facilities. Gardner et al (2001) observe:
….many British shipping companies have reduced or given up altogether

their former commitment to cadet and junior officer training in order to save
costs and remain competitive… (2001:353).
Pettit et al (2005) explains the impact of this trend of sourcing foreign labour on cadet
training as follows:
As the shipping industry has adapted to the global labour market

the UK has increasingly sourced its seafarers from other nations.
This has in turn led to a significant decrease in the number of UK
nationals training as seafarer cadets and following a career path
through to Unlimited Certificates of Competence as either Masters
or Chief Engineers (2005:521).
Gardner’s observation suggests that the use of foreign crews by British ship-owners
affects cadet training in the UK in that it reduces the training potential by diminishing
the number of training sponsors. It also, supposedly, reduces the number of British
nationals willing to train for, and follow, a long seafaring career path. It is therefore
seen as a direct consequence of the decline in tonnage and increased deregulation.
Certainly in line with this argument the decline in the number of qualified British
- 60 -
seafarers, and the fall in cadet recruitment and training levels, followed the decline in
the UK tonnage (see figure 10).
Figure 10: UK Cadet Recruitment 1970 - 1997
Recruitment of Cadets 1970 - 1997. Source: UK Chamber of

Shipping
4500
4000
3500
Cadet Intake
3000
2500
2000
1500
1000
500
0
1970
1072
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1997
Year
Adapted from Gardner et al, 2001
By the 1990s the decline in the maritime skills base had become critical and many
argued that this required effective and immediate attention (Obando-Rojas et al, 1999;
Selkou and Roe, 2002). Seemingly, it was due to recognition that the decline was
having a negative impact on the maritime clus ter that the government intervened rather
than concern for seafarer jobs per se. Intent on protecting shore-based marine related
industries, the government sought to bring together all maritime stakeholders in order to
find a way of reversing the situation. After a few years of deliberation the government
adopted its first ever comprehensive policy for shipping outlined in the government
White Paper British Shipping: Charting a New Course in 1998. It is this policy which
laid the ground for the main instrument for the recovery of shipping – the UK tonnage
tax.
3.3 The Tonnage Tax Strategy

The history of the UK tonnage tax does not date back to the adoption of the government
shipping policy. It is instead part of the wider European Commission’s push towards a
common European response to the decline in European Union (EU) shipping.
Furthermore, the strategy is not unique to Europe because the tonnage tax approach
adopted in the EU is just another version of a strategy that had been practiced in many
countries around the world and is not very different from the system used by Open
- 61 -
Registers. Whereas the tonnage tax strategy adopted by the ORs was proactive, however,
the EU states adopted it as a reactive measure to counter a decline in fleets and labour.
3.3.1 The EU Tonnage Tax

After many unsuccessful attempts, by individual European shipping nations, to stop and
reverse the decline in their shipping industries, the European Commission, in the mid-
1990s, decided to call for a common EU approach which would harmonise EU member-
state shipping policies and encourage the adoption of a common strategy for a recovery
and growth in EU shipping (Haralambides, 2006). Progress towards an EU tonnage tax
began with the paper; ‘Towards a New Maritime Strategy’ published in March 1996
(EC, 1996). This paper highlighted two important points. Firstly, that the decline in
European shipping had come about as a result of increasing uneven competition caused
by the protectionist practices of third countries with maritime ambitions, the open
registry flag-states. Secondly, that a common European approach was required to
counter this uneven competition while, at the same time, strengthening the EU stance on
safety and the protection of the environment. It argued that, in order for EU shipping to
prosper, there had to be a more competitive maritime business environment for EU-
flagged ships. Legislation was therefore needed to:
1. Promote the EU- flagged maritime industry
2. Strengthen safety and environment legislation
3. Develop third-country relations and
4. Improve overall competitiveness and general conditions for EU shipping (EC,

1996)
Although there are common overall aims and objectives for the EU tonnage tax, each
member state is allowed to design its own version tailored to individual situations and
circumstances, subject to approval by the European Commission. The overall aim is to
develop a unified and, hopefully, more effective response to the forces causing the
decline in their individual national shipping industries. In other words, the European
Commission recognised the fact that no single member-state possessed sufficient
capacity to effectively respond to the decline. A European version of the Tax was,
therefore, proposed as the common strategy needed to address the problems of falling
- 62 -
fleets and declining employment. Over the years, it has been progressively adopted by
member-states including the Netherlands, 1996 and Germany and the UK in 1999
followed by other member states as shown in the table below.
Fig. 11: The Adoption of Tonnage Tax in the EU
Member State Date of Introduction

The Netherlands 1996
Germany 1999
United Kingdom 1999
Finland 2001
Denmark 2002
Spain 2003
The Republic of Ireland 2003
Belgium 2003
Italy 2003
France 2004
Sweden Under consideration
Source: Selkou and Roe (2004) and The Transport Institute website,
http://www.trans- inst.org/EuropeanMaritimePolicies.htm
Of all the EU states Greece is distinctive and does not fit in with the wider EU agenda
because it had introduced a tonnage tax proactively as early as 1975. It is possible that
having studied the open registry model and having observed the rapid expansion of the
OR fleet, Greece decided to strategically position itself as a destination for European
ship-owners disgruntled with their national flag regimes but unwilling to risk the
negative implications of being associated with the FoC image. As a consequence of the
tonnage tax regime introduced in 1975, Greece managed to maintain her own fleet while
other European countries were losing theirs. As of 2006 when the EU initiated a
coordinated approach to the decline, the Greek fleet was 27.5 million GRT strong as
compared to other European flags like Germany (5.8m), Netherlands (3.9m) and the UK
(3.8m).
In the remaining sections of this chapter I will focus on the UK tonnage tax and
examine how it was conceived and the impact it has had on British shipping in the six
years it has been in operation.
3.3.2 Towards a New Strategy for UK Shipping

Following the production of the government white paper in March 1999, the Chancellor
of the Exchequer commissioned, from Lord Alexander of Weedon, an independent
- 63 -
inquiry into the case for, and the design of, a tonnage tax regime for shipping. The
Alexander Report concluded that the UK should introduce a tonnage tax as an essential
element of UK maritime policy in order to create a positive fiscal environment for
shipping in line with other major maritime countries like Germany and Netherlands
which had introduced a similar strategy (Alexander Report, 1999:10). Unlike these
other countries, however, where the tonnage tax is simply a deferral of tax until a
business leaves the system, the UK system aims to achieve a real and permanent
reduction in the tax liability of participating businesses (DETR, 1998; Watson et al,
2006).
The UK legislation enacting the tonnage tax was introduced by the adoption of the 2000
Finance Bill, on July 28th . This law gave effect to the immediate application of the
strategy to British shipping and companies. They were allowed to opt in for accounting
periods starting on, or after, 1 January 2000.
3.3.3 The Design of the UK Tonnage Tax
As stated in the previous subsection, the tonnage tax was introduced as an essential
strategy for the recovery of British shipping which would create a ‘friendly’ atmosphere
for shipping business. Considering the extent to which the industry had declined, the
UK tonnage tax was required to be an ‘all- inclusive’ strategy to address all the aspects
of the decline, that is, the size of the registered fleet, the maritime skills base and the
shore-side maritime cluster of industries.
In order to bring about recovery in the UK registered fleet, the tonnage tax was offered
as a more favourable alternative system of calculating corporation tax for shipping
companies based on fixed rates and with reference to a companies’ total operating
tonnage per year rather than its total income. The shipping activities subjected to this
system are tightly ‘ring- fenced’ so as to make sure that only genuinely shipping-related
activities fall under this tax system and that companies do not have the chance to abuse
the system by bringing company activities which do not qualify under the system
(Selkou and Roe, 2002). Some of the benefits of the tonnage tax to shipping companies
include:
• A simple, fixed-rate and low tax regime for shipping
• Certainty as to the level of taxation on a companies’ shipping activities

- 64 -
• Reduced annual tax for Single-ship or group companies engaged solely in

shipping business
• Deferred tax liabilities for public companies will be phased out under the
tonnage tax, hence increasing their reported earnings per share.
• Encourage ment to commercially driven as opposed to tax driven ship investment

(see DETR, 1998; Alexander Report, 1999; Selkou and Roe, 2002)
All this was meant to create a relatively low-cost and user-friendly business atmosphere
for shipping companies with the aim of attracting more ship-owners to register and
operate their ships from the UK. Furthermore within the regime, there is a requirement
that all vessels operating under the system must be strategically and commercially
managed from the UK. This approach was designed to encourage growth in shore-side
maritime activities (Brownrigg et al, 2001; Selkou and Roe, 2002).
At the same time a recruitment and training commitment – the Minimum Training
Obligation (MTO) – was built into these requirements. This commitment obliged all
those ship-owners opting into the tonnage tax to recruit and train UK cadets. These
companies must submit a training plan to the Department of Transport (DfT)
demonstrating a commitment to provide officer training places (or make a payment in
lieu of training in proportion to the crewing complement of the ships operated by the
company). The MTO is made up of three main elements:
(i) The Core Training Commitment (CTC), an annual plan produced by the
company, and subject to DfT approval, setting out the company's training
obligation and how it will be met.
(ii) The End of Period Adjustment (EPA), a retrospective update of the MTO,
made three times a year in respect of the preceding four- month period, to
account for actual training performance against the CTC and any incremental
training obligation arising as a result of a net increase in the number of vessels
entered in the tonnage tax regime.
(iii) Payments In Lieu Of Training (PILOT), by the company to the Maritime

Training Trust (MTT ), where necessary to meet their training obligations. The
MTT is a company established by the Chamber of Shipping, the National Union
- 65 -
of Marine, Aviation and Shipping Transport Officers (NUMAST), now known

as Nautilus UK, and the National Union of Rail, Maritime and Transport
Workers (RMT) to hold and allocate monies contributed by companies for the
purpose of promoting the training of seafarers (see DfT, website).
The Minimum Training Obligation is a key ingredient in the tonnage tax system meant
to ensure a quick replenishment of qualified officers for future use in the UK fleet and
the wider shore-side cluster of maritime related firms.
The training commitment requires that every participating company train one UK cadet
for every fifteen officer positions entered in the effective officer complement of all
participating vessels irrespective of nationality plus a notional 50% to cover back-up
officers. The effective officer complement is calculated as the number of relevant
officers entered on the Safe Manning Document (SMD) for all vessels entered in the
tonnage tax regime, adjusted to include back-up officer provision. This commitment is
for an initial period of three years after which the ratio of cadets to officers will reduce
to one cadet for every five officer positions.
Under the PILOT option, a company may, in exceptional circumstances, opt to make a
payment of £550 per head per month in lieu of training (HMSO, 2000 and, for more
discussion and critical analysis of the Tonnage tax, see Brownrigg et al, 2001; Gardner
et al, 2001; Selkou and Roe, 2002; Leggate and McConville, 2005). The circumstances
are strictly assessed and mainly relate to the company’s capacity to directly recruit and
train cadets. This is to ensure that all participating companies, even the smallest single-
vessel ones contribute to skills development. Eligibility for cadetships under this
arrangement is not restricted to only British nationals. Other nationals within the
European Economic Agreement (EEA) may benefit but, for them to be eligible, they
must ordinarily be resident in the UK. Since most are not, ship-owners contemplating
entering the tonnage tax regime should assume that they will be recruiting
predominantly UK citizens as trainees.
The training obligation is strict and failure to implement or comply with the training
programme is a criminal offence. In serious cases of repeated failure, the company will
be prevented from renewing its election to remain within the regime until it has
complied properly with its training obligations (HMSO, 2000). Considering that such a
- 66 -
failure is considered ‘criminal’ this penalty seems too light which further indicates the
soft stance that the state takes towards shipping corporate capital.
3.3.3 Entry into the Tonnage Tax System

Entry into the system is by means of election which is for a period of ten years and can
be renewed at any time before the expiry of the initial period. This means that it can be
renewed annually on a ‘rolling basis’ so that, at any point in time, there may be an
election in place for the succeeding ten years. First of all, however, participating
companies must be ‘qualifying companies’. They must be companies operating
‘qualifying ships’ which are ‘strategically and commercially’ managed from the UK
(HMSO, 2000).
There are strict criteria for selecting ships which qualify for the tonna ge tax. A ship
must be over 100 tons gross tonnage and must be ‘sea going’. Such ships include any
vessels that are certified for international trading by virtue of a load line certificate or an
international load line certificate, even though they may not trade internationally.
Furthermore, with regard to the concept of ‘ring- fencing’ mentioned earlier, not all the
activities of a shipping company qualify for the tonnage tax: Those that qualify include:
(i) Core qualifying activities - These are those activities directly related to the
business of sea transport. They include: the carriage of passengers or cargo;
towage, salvage or other marine assistance; and transport in respect of services
necessarily provided at sea. They also include general management of a tonnage
tax company’s own ships, for example, public relations and technical
management activities like ship management and crewing.
(ii) Qualifying secondary activities - These activities cover a range of

commercial activities that are naturally part of the process of operating ships on
a commercial basis, although not necessarily inherently maritime in nature for
example, selling travel tickets, some linked holidays / transport on land and
gambling on cruise ships.
(iii) Q ualifying incidental activities - These are any activities not covered by the
above two categories, to the extent that they do not exceed 0.25% of the
taxpayer’s turnover from its ‘core qualifying activities’ and ‘qualifying
secondary activities’ (only up to the ‘permitted level’, where relevant).
- 67 -
(iv) Dividends - Dividends are within the scope of tonnage tax if they are paid
to a tonnage tax company by a foreign subsidiary which would itself have been
eligible for tonnage tax if its business activities had been based in the UK.
(v) Interest receipts - The interest must be an integral part of the shipping
company’s trade in order to qualify (HMSO, 2000).
Initially the UK tonnage tax did not insist that participating ships be UK, or indeed, EU
registered. Rather, it operated on a ‘fla g- free’ basis so that ship-owners could bring
foreign registered ships into the tonnage tax as long as all the other conditions of
nomination were met. This condition has since changed with the revision, in 2004, of
the EC Guidelines on State-Aid to Maritime Transport to include a requirement that any
ship that benefits from the tonnage tax system must be registered in a European Union
member state. This requirement was introduced in the UK by the Finance Act 2005 and
it applies to all ‘new’ ships, that is, those that come to be operated by a tonnage tax
company for the first time (HMSO, 2005). The law requiring that all ‘new’ UK tonnage
tax ships be EU registered came into force on the 1st of April 2006.
However, these flagging requirements apply only when all the conditions set out in the
act are met. These are:
(i) That the ship comes into the system in a financial year that has not been
accepted, hence the requirements apply; that less than 60% of the company’s
tonnage tax ships are EU flagged.
(ii) That the percentage of the company’s total tonnage that is Community-
flagged is less than the percentage that was Community- flagged when the
company first entered tonnage tax (HMSO, 2005; Watson, Farley and Williams,
2006).
3.4 The Performance of the Tonnage Tax to Date

A performance evaluation of the strategy, by the Department of Transport and the
Inland Revenue, four years after its introduction, indicates a positive score on all but
one of the three main targets set when establishing the tonnage tax. With regard to
increasing the fleet and boosting growth in the shore-side maritime cluster, the strategy
has shown a high level of success. According to Department of Transport (DfT) data,
- 68 -
the number of vessels participating in the tonnage tax steadily increased from 134 in
2000 to 816 in 2005. Because of the ‘strategic and commercial management location’
requirement, many British and foreign companies participating in the tonnage tax
regime have relocated a large amount of their ship management operations to the UK.
It must however be remembered that until the 1st of April 2006, this increase in tonnage
tax vessels did not necessarily mean an increase in UK flagged vessels since the regime
allowed companies the option of retaining vessels in foreign registers while operating
under the tonnage tax. With the enactment of law requiring that all new tonnage
entering the scheme be EU registered (HMSO, 2005; Leggate and McConville, 2005), it
is expected that the UK national register will quickly grow as a result. Already, by June
2004, there had been a big positive response in this direction; the UK registered fleet,
according to World Fleet Statistics (2000 - 2006) has grown from 5,531million GT in
2000 to 12,149,988 GT in 2006.
With regard to increasing the numbers of qualified British junior officers, however, the
strategy has not registered the success that was initially expected. This is in spite of the
fact that, according to DfT statistics, all the tonnage tax participating companies are
either directly training UK cadets or making the required payment in lieu of training
under the minimum training commitment. Cadet training levels are still far lower than
initially projected and the number of qualified British officers has continued to decline.
According to the 2006 UK Seafarers Analysis (Glen, 2006), the number of all UK
officers has remained largely unchanged being 13,100 in 2000 and 14,370 in 2006 while
future projections show that, at the current rate, by 2021, the number will have dropped
to 6,190. Although annual cadet intake rose by about 20%; from 450 in 2000 to 630 in
2006, the number of cadets in training has remained low, being 1,020 in 2000 and 1,090
in 2006. This indicates that the annual output of qualified junior officers has not
improved since the introduction of the tonnage tax. This paradox has stimulated the
empirical data collection behind the thesis.
3.5 Conclusion
The analysis in this chapter and in chapter two raises a number of important questions
about globalisation and its impact on the nation state’s ability to effectively manage the
domestic economy and protect local industries and employment from decline. The
implementation of the UK tonnage tax and its impact says something specific about
- 69 -
whether or not the state can effectively respond to globalisation and the growing
influence of global corporate capital.
The questions arising from this discussion and driving this study and the discussions in
the remaining chapters have been discussed in chapter one. Fundamentally they are:
(i) How has government responded to the globalisation of shipping?
(ii) What shaped the government response?
(iv) How could the response have been more effective?
The analysis in this chapter suggests that the tonnage tax strategy has not delivered the
kind of results that were expected by all the stakeholders involved in the design.
Seemingly, it has had more success with regard to recovering the UK fleet but failed to
effectively address the issue of declining seafarer numbers and general maritime skills
base. The task is to try and understand why the response has not been effective and this
is achieved through a critical qualitative analysis of the strategy, its design and
implementation. The analysis will include an assessment of how the contextual factors
discussed in the chapter shaped the government response and influenced the outcome.
The chapter has shown that the shipping industry has undergone great transformations
in the past few decades and that it is now characterised by highly mobile multinational
capital, transnational labour and a highly deregulated ‘playground’ for both capital and
labour. It is upon this platform that the government sought design its response and it is
against this background tha t the thesis examines the state’s ability to manage
globalisation and harness its benefits while mitigating its negative impacts.
The questions guiding this study will be addressed through detailed research whose
design is documented in the next chapter. Chapter four describes and discusses the
methods employed in the study.
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CHAPTER FOUR
Methods and Methodology
Introduction
The broad aim of this study is to investigate the imp act of globalisation on nation states
and their capacity to manage domestic economies and protect local industries and
employment. In order to do this the thesis critically examines the effectiveness of the
UK government’s response to the decline in the shipping industry, with particular
emphasis on the preservation of a pool of qualified merchant navy officers. The
methods that I have employed in the collection of data for the project include qualitative
semi-structured interviews, policy document analysis and an analysis of statistical
secondary data.
The focus of the study is the tonnage tax as the government’s main strategy for the
recovery of both the UK national fleet and the pool of qualified merchant navy officers.
The research relies on views collected from various relevant persons and organisations
in the industry including government policy officials, shipping industry managers,
seafarer union officials, cadet college administrators and staff, training company
managers and individual ex-cadets. At the same time the thesis relies on the rich
information contained in the various relevant policy documents which detail the design
and adoption of the tonnage tax. The main objective is to critically assess the strategy;
its design and implementation, and try and understand why it has not succeeded in
increasing the number of qualified British junior officers as originally anticipated.
The study involved a detailed investigation of officer recruitment and employment

policies of UK-based shipping companies and their views on, and attitude towards, the
tonnage tax as the main recovery strategy for British shipping. It also involved a
detailed study of the process of designing, adopting and implementing the government’s
response and the motivation behind the response. The views of training agency
managers and college staff provided important data on how well the strategy has been
working in terms of increasing cadet recruitment and training, while, interviews with
individual ex-cadets provided valuable, ‘first person’, accounts about the training
process and training experiences.
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This chapter is therefore a discussion of the research design and it describes the research
process, including an outline and discussion of the methods used both for the data
collection and analysis. It is organised into six broad sections. Section one presents an
account of how I came to do the study and provides a brief justification for my
preference of qualitative research methods. Section two presents a detailed description
of the research process and the methods that I used in the data collection. Section three
contains a description of the various sources for my data and presents an analysis of
each source and its appropriateness as an important data source for the study. Section
four briefly explains and justifies the process of data analysis and the methods used.
Section five presents a discussion of the challenges, limitations and ethical
considerations in doing the research and provides a critical assessment of the research
process. Finally section six presents a brief view of the methods vis-à-vis the research
questions they are intended to help answer.
4.1 My Trajectory in relation to Social Science Research

I believe that knowledge is socially constructed and that social phenomena are better
understood through active social interpretation. The meanings of stories depend on who
is telling them, the social- historical context and the intention. It is therefore of utmost
importance to consider the social- historical setting when extracting meaning from social
phenomena. Crotty (1998:67) argues that social reality and meaning are ‘socially
derived and historically situated’.
Growing up in rural Kenya and listening to the oral narratives told by my grandmother
was very interesting and influential in my social outlook and general understanding of
society and life. Each evening as we got ready to go to sleep, I always found my heart
pounding in anticipation of the next evening story. There were many narratives about
the community and community life. This, I believe, ignited my interest in the literary
arts and therefore influenced my decision to take Literature as my major at university. A
deeper and more extensive exploration of the same stories, later in my studies revealed
that those stories had rich and practical social meaning woven into them, and that there
was always a message, a teaching, in every story.
I also discovered that the same stories were duplicated, with interesting modifications,
in several neighbouring communities. I thus realised that folklore was the society’s way
of explaining social and natural phenomena in the absence of scientific explanations
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apart from being a form of education and entertainment. There were stories about work,
witchcraft, wars with neighbouring clans, marriage, death, religion, etc, and each story,
as told differently in the various communities, revealed the different perspectives from
which the communities viewed and understood various social activities and natural
occurrences. Thunder was understood differently in different communities and so was
death, religion, and marriage but, in the dissimilarity, there was always interesting
similarity.
It is this interesting marriage of similarity and dissimilarity in the interpretation of social

and natural phenomena that influenced my first research project. It was a study towards
my bachelor’s dissertation and it focused on social meaning and interpretations in oral
narratives. It involved collecting, and analysing the various stories that existed and were
told similarly in various communities in Kenya in order to determine patterns of
similarity and difference in meaning. The intention was to understand how the various
communities interpreted certain aspects of their social and natural world, what
influenced any differences in interpretation and how these meanings and interpretations
were conveyed in folklore.
Through this project I confirmed my earlier suspicions that oral narratives were devised
to explain the composition of social and natural environments. The project also revealed
that these stories formed a body of reference for society as to what was ‘right’ and what
was ‘wrong’; ‘good’ and ‘bad’. This body of reference influenced the lives of
generations down the line as they were passed from generation to generation. What was
also interesting to note was the fact that the variations in the stories were not only across
communities but also along time. Different generations told the same stories with slight
variations indicating that societies’ interpretations of social and natural phenomena
changed from place to place and with time.
In one of my educational philosophy modules at the university titled ‘Philosophy and

Social Development’, I was formally introduced to the various theories of knowledge;
objectivism, subjectivism and constructivism (Denzin and Lincoln, 1998). We analysed
and critically examined the arguments that go with each, and I was greatly impressed by
the theory of the social construction of knowledge; that truth and meaning do not exist
in some external world, that they are not handed down as replicas of a reality that exists
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out there but are constructed through a dynamic, continuous and active interaction
between people and their environment within a natural social setting (see Gray, 2004).
Shortly afterwards, another research opportunity came in the form of a qualitative

linguistic research project in which I participated as a research assistant. It was research
project on the phonology and syntax of my own native language conducted on behalf of
Bayrueth University, Germany by Dr. Jellehart Cammenga. We collected words,
phrases, their pronunciation and meanings, and analysed the syntactical and
phonological structure of the language. I greatly enjoyed these two projects because it
was interesting to go out and talk to different people and learn things about their lives
and languages. I did not know it then but now I look back, in the light of my entry into
social science research and realise how much these brief research experiences influence
my thoughts about societies and the nature of knowledge.
Although I would have preferred to proceed with further education immediately after
my undergraduate degree, I found that I was unable to raise the funds required for a
Masters’ degree programme and therefore had to settle down to a government teaching
appointment. It was not until 2003 that I was able to continue with studies but by this
time I had developed an interest in commercial shipping and studied for a diploma in
ship-broking such that, when I applied to do a masters’ degree at Cardiff University, it
was in International Transportion rather than the study of people and societies.
The opportunity to study for a Ph. D in the social sciences came purely by chance at the
end of my masters’ programme but the fact that the focus of the Nippon Fellowship was
to develop a sociological approach to studying the maritime industry appealed to me
greatly. I saw it as a chance to marry my three kinds of academic and professional
interest and experience, that is, teaching, shipping and sociology. Although there was no
clearly mapped out path to my eventual entry into social science research, all the
necessary ingredients were there, that is, the drive for academic and professional
excellence and an interest in societies, people and their ways of life.
The above trajectory might perhaps explain my inclination towards the constructivist
theory of knowledge and the qualitative methods approach which I have used in this
study. This stems from my strong belief that meaning is socially constructed and
therefore the best way to ‘discover’ social meaning is by observing, interacting with,
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and ‘interrogating’ people within their natural social setting (Fontana and Frey 1998;
Rubin and Rubin, 1995). Through their accounts the researcher is able to arrive at an
understanding of how the society works. For this reason I have employed predominantly
qualitative interviews in my study although complemented with document analysis and
secondary data analysis as described in the next section.
4.2 The Research Process

As I have already indicated in the introduction my data was collected using three
different but complementary methods, semi- structured interviews, policy document
analysis and secondary data analysis. The main method was, however, semi-structured
interviews. The main study lasted 12 months; between November 2005 and October of
2006, followed by continuous follow- up during the data analysis and write-up period
(see appendix eight for research time-table). My choice of methods was influenced by
the type of data that I was looking for. I wanted to collect qualitative data from key
stakeholders in the UK shipping industry which would help me describe and critically
examine the adequacy of state response to the decline in the shipping industry.
In this section I describe each of the methods that I used, how I used them and to what
effect.
(I) Semi-Structured Interviews
Considering the kind of data I was looking for, the interview approach came across as
the most suitable because it is an effective tool for collecting qualitative data.
Furthermore it is a simple and highly practical tool to use in social and professional
settings of all kinds. It is an easy method to use because it is built upon every person’s
natural and basic conversational and social interaction skills. Fontana and Frey (1998:47)
describe interviewing as “…both the tool and the object; the art of sociological
sociability…” because it is the natural tool for social communication and is therefore
best suited for this type of social research (see Lofland, 1971; Denzin and Lincoln, 1998;
Arskey and Knight, 1999; Hostein & Gubrium, 2003). What this means is that after
considering all other types of qualitative research methods, interviewing came across as
the most suitable for my research and one which would ensure rich and appropriate data.
With specific reference to the semi-structured interview the main advantages include
effective time management and the fact that it is ‘structured’ enough to provide a
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reasonably defined scope of exploration but ‘open’ enough to allow a reasonable depth
and breadth of exploration of the set topic (see Holstein and Gubrium, 1997, 2003;
Denzin and Lincoln, 1998; Fielding and Thomas, 2001; Hopf, 2004). After careful
assessment of the other qualitative interview approaches, including in-depth and
structured interviews, the semi-structured interview was the best for my kind of research
considering the need to balance reasonable structure and substantial flexibility in the
exploration of my research topic. What this means is that as a researcher using semi-
structured interviews I am in a position to determine how wide and deep the exploration
goes within the appropriate parameters of the research. By carefully guiding and
controlling the interviews using appropriate probes and prompts, I would therefore
ensure that I achieve suitable depths and widths of exploration.
I conducted interviews with various people within the shipping industry in the UK and
some of the bodies, institutions and organisations I visited included training colleges,
ship owning and operating companies, ship management companies, cadet training
agencies, government departments and seafarers unions. I also interviewed individual
ex-cadets. The aim was to explore the participants’ understandings of the decline in
British shipping and get their views on the government response with regard to its
design, adequacy and impact on UK shipping. By the end of the fieldwork I had
conducted interviews with: 25 Human Resources (HR) or Operations Managers from 25
UK-based shipping Companies; training administrators and staff from two cadet
colleges; Four training company managers; and 15 ex-cadets. In addition I carried out
two interviews with government policy officials and two interviews with seafarer union
officials. In total I conducted 50 interviews. From the ex-cadets, I specifically sought to
extract ‘first-person’ accounts of the training process and training experiences, both in
college and at sea. I asked industry managers about their officer recruitment and
employment policies and the determining factors in their choice of seafarer sources as
well as their views on the adequacy of the tonnage tax in tackling the problem of
declining numbers of seafarers in the UK.
With the training agency managers and cadet college staff I explored the training
process and the difficulties and challenges involved in recruiting and training cadets
both in college and at sea. Government policy officials provided useful information on
the design of the government strategy and the constraints to effective response from the
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state’s perspective while union officials provided the union perspective on state
response, effectiveness and adequacy.
Every interview initially started with a lengthy process of access negotiation involving
phone calls, e- mails and formal (postal) letters. With the exception of cadet interviews,
all the other interviews were held within the premises of the institutions where the
various interviewees worked. Three of the interviews were, however, conducted via
telephone because circumstances made face-to-face meetings impossible. Most of the
cadet interviews were conducted in hotel rooms, restaurants, and coffee shops.
The interview sessions were, in all cases, by ‘diaried’ appointments and involved the
use of a combination of tools. I kept a notebook in which I would jot down notes
reflecting my observations and thoughts about the surroundings and the ‘atmosphere’ of
the interview setting. I also used the notebook to write down notes during the interview
sessions about things that struck me as interesting and of possible relevance to the study
– things that might tell a story about the person and the organisation. These notes
included observations about the interviewee’s reactions, including body language and
the apparent attitude and response to various questions.
During the interview, and with the express consent of the interviewee, I recorded the
session on a small, non intrusive, digital voice recorder because I could not rely on my
memory to capture, accurately, the whole interview. There were two occasions,
however, on which the interviewees did not wish to be recorded in which cases I used
my notebook to take down notes in the form of main ‘aide memoire’ key points. In such
cases, I always found a quiet place, immediately after the interview to expand the notes
into comprehensive text. Each interview lasted approximately one hour.
Alongside the notebook I maintained what I call my ‘after-session’ note-book which I

used to record every detail about the day relevant to the research. Some of the things I
recorded in this book included the journey to the premises, the reception, the
surroundings and the general atmosphere within the premises, the journey back and any
difficulties faced during the whole process. I also wrote down some of my preliminary
observations and conclusions deduced from each interview.
I used short-point- format interview guides to structure each interview (Appendix five).
The interview guides were only structured sufficiently to provide the main boundaries
for the exploration while allowing sufficient flexibility for an exhaustive, meaningful
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and productive discussion (see Holstein and Gubrium, 1997; Fielding and Thomas,
2001; Hopf, 2004). Before the beginning of every interview session I asked the
interviewees to read and sign a Research Informed Consent Form to confirm that they
were taking part willingly and were happy for the session to be recorded digitally
(Appendix three). I also gave them a Research Participant Information Sheet containing
the main facts about the research so that they knew what it entailed. It also served to
inform them about how their identities would be protected and the use to which the
information they provided would be put (Appendix two). This only served as a formal
notice since most of these issues had already been discussed during the period of access
negotiation. Both of these procedures are part of the SOCSI Ethical Committee’s
requirements to ensure that the research is conducted within the accepted and necessary
ethical boundaries.
After collecting all the data and running the initial preliminary analysis in the month of
November, it was necessary to conduct a few more follow-up intervie ws in order to
clear-up certain issues which arose in certain areas. Most of this follow-up exercise was
either by e- mail or telephone although four ‘second round ’ face-to-face interviews were
conducted. The follow-up process, for the purposes of updating the data and
information, however, continued through-out the analysis and write up stages of the
project.
(II) Policy Document Analysis
Since the main objective of the thesis is to assess the adequacy and effectiveness of the
tonnage tax as the state’s strategy to reverse the decline in shipping, it has been
necessary to review and examine the process by which the strategy was designed and
adopted. There is a detailed and rich history of the process contained in various
government documents such as government policy papers and House of Commons
Committee reports. Some of the documents that I ana lysed included:
(i) The European Commission paper, Towards a New Maritime Strategy

published in 1996 setting out objectives for the recovery of EU shipping.
(ii) The March 1998 report of the Shipping Working Group (SWG) set up by
the government in 1997 to deliberate on ways of addressing the decline in
shipping.
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(iii) The government White Paper: The Future of Transport, published in July,
1998 following the SWG report.
(iv) The Government White Paper: British Shipping - Charting a New Course,
published in December 1998 and containing the government’s first ever
comprehensive policy for British shipping.
(v) The Alexander Report of August 1999, commissioned by the Chancellor of

the Exchequer commissioned from Lord Alexander of Weedon to look into
the case for introducing a tonnage tax for UK shipping.
(vi) The Finance Acts of 2000 and 2004; the earlier one enacted the tonnage tax
into British law while the latter amended the same.
This part of the research involved a rigorous and in-depth ‘interrogation’ and analysis of
the content of these various documents in order to determine the government’s
diagnosis of the problem of decline, its motivation to intervene and the process of
designing the strategy. Of particular importance, apart from the actual content in such
documents, is the tone and language used which often communicates seriousness, intent
and conviction on the part of the designing party – the state. Most importantly, the
information collected from the documents usefully comple mented interview data from
government policy officials and provided a comprehensive ‘picture’ of the shape of the
state response and the factors behind it.
The approach I adopted for analysing the documents was one of cross-thematic content
analysis (see Strauss, 1987; Strauss and Corbin, 1998) whereby I identified and isolated
a number of key themes and studied them closely in order to understand the
government’s motivation, intentions and approach. I started by reading the documents
and familiarising myself with the contents. It was during this reading phase that I
identified the main themes. I then loaded the documents onto the computer-based
qualitative data analysis programme, NVivo, and proceeded to bisect the scripts into
several paragraphs which I dragged and pasted into designated ‘codes’ representing the
various themes previously identified (see Bazeley, 2007). Some of the themes included
government diagnosis, motivation, intentions, fleet loss and officer decline. After this
initial process of coding I proceeded to cross-analyse the various themes in order to
identify details such as what motivated the state to respond, what the objectives were,
- 79 -
how the government interpreted the situation of decline and what obstacles there were
to government response.
(III) Secondary data analysis
I believe in the strength of a mixed methods approach to social science research because
it enables thorough and exhaustive exploration of research topics (See Denzin and
Lincoln, 1998; Creswell, 2003). In this case, a combination of quantitative (secondary)
statistical data analysis and qualitative approaches provide a better understanding of the
situation of industry decline and government response. In order to analyse, discuss and
illustrate trends in officer numbers and ship registration, I analysed statistics kept by
various research institutions like the London Metropolitan University Centre for
International Transport Management which produces an annual analysis of UK Seafarer
numbers, UK Chamber of Shipping Data on fleets and manpower, Seafarers
International Research Centre Data on the Seafarers’ Global Labour Market and
Department of Transport data on shipping fleets and seafarers.
The study was structured with document analysis first, between November 2005 and
January 2006 - to establish the general background - followed by the interviews for the
rest of the period, until October 2006. In this way my discussions with the various
interviewees about government policies and state strategy were direct and focused
which helped to ensure that the data collected was relevant, detailed and rich. The
secondary data analysis came in-between and during the course of these two main
research exercises (document analysis exercise and interviews) and provided figures and
trends on fleet capacity, the number of officers, and cadet intake and training levels.
4.3 Data Sources

The maritime sector is highly complex and is made up of many different industries and
firms. Shipping is however the core of the cluster and forms the mainstay and major
catalyst for all maritime activity. It is also one of the major revenue earners for the
government and acts as an important stimulant to economic growth. The decline, which
has been experienced in the UK shipping industry over the past thirty years is, therefore,
of great concern to many stakeholders including the government, the corporate shipping
industry (which consists of owners, operators, ship managers and, training agencies),
ports and harbours, seafarer labour and labour unions, cadet training agencies and
- 80 -
institutions, and a host of other maritime related firms, commonly known as ‘the shore-
side maritime cluster of firms’. All these industry stakeholders are either directly or
indirectly affected by the decline, both in tonnage and seafaring skills.
In order to understand the decline and assess the government’s response and its
adequacy I collected and critically examined views from personnel in some of the main
industry bodies and organisations. The main organisations which I targeted included
relevant government departments, the shipping corporate community, cadet training
colleges and seafarer trade unions. In the following section I am going to briefly
describe each of these and explain how and why they were important as data sources for
the study.
(i) The shipping corporate community
The shipping corporate community comprises a variety of firms which engage in

commercial operations directly related to the ownership, operation, management, and
crewing, of ships. Apart from being the potential employers of seafarers trained in the
UK, UK-based shipping companies are also the main sponsors of the recruitment and
training of British cadets. The importance of the corporate community as a major source
of data for the study can, therefore, not be overstated. It was important to examine
companies’ officer recruitment and employment strategies and assess their attitude
towards the tonnage tax, and the training commitment, in order to engage in a
productive and meaningful discussion of the impact of the tonnage tax recovery strategy.
This is because company recruitment policies and strategies determine the prevailing
patterns of seafarer demand and supply globally. Whether the government strategy
works, or not, depends on how companies respond to it and how their recruitment
strategies change as a result of it. The data collected from company managers was
therefore vital in reaching an understanding of industry attitudes towards the tonnage
tax and its effectiveness. Furthermore, company recruitment policies determine the
success of the Minimum Training Obligation.
- 81 -
For this reason I sought access to companies and interviewed the Human Resources
and/or 1 Operations Managers of several different shipping companies based in the UK.
As one of the major traditional shipping nations (home to a significant shipping centre –
London) the UK is the base for a variety of shipping companies and of different forms
and sizes. I was able to visit a reasonably wide range of these companies with the aim of
reaching as many relevant categories as possible.
The form and shape that shipping companies take is often complex; the difficulty with
categorising most of them is that they are often multifunctional and, although they are
based in the UK, many of them operate internationally such that classification by
nationality is often vague, inaccurate and potentially misleading. Many of the ship
management companies that I visited, for example, were international outfits which
manage ships for owners and operators from all over the world. The same is true for the
UK’s main training companies which have international affiliates which recruit and
train cadets in many different locations around the world. This complexity is inherent in
the shipping industry.
Very few of the companies I visited had all their ships registered in the UK register
since many tended to spread their vessels across a number of flags. Some of the
companies had already opted into the tonnage tax, with varying percentages of their
vessels participating, while some had chosen not to participate at all. Another
complexity was presented by the fact that there was a lot of overlap in business
functions, especially with operator, owner and management companies. It is not
uncommon to find management companies which also own ships or owning companies
which also offer management services for other ship-owners and operators.
In undertaking the research it was important to explore how different companies

approached the recruitment and employment process, examine their sources of officers
and try to determine how factors such as size and capital base, business type and
company history influenced officer recruitment and attitude towards government
1
My preference was to interview HR managers but not all companies had dedicated HR managers and
therefore where these posts did not exist I interviewed ORs whose duties, in such cases, generally
includes HR management.
- 82 -
response to the decline. The table below shows a summary of the characteristic features
of the companies whose managers I interviewed.
Figure 12: Summary of Company Features
Company Code Business Function Size History Ships’ Flag Tonnage tax
Company 1 Owner/Operator 11 vessels . Incorporated in Mixed-flag fleet Participating

Information on 2002
staffing not
available
Company 2 Management/ 15 vessels . Old family Mixed-flag fleet Participating
Owner/Operator Information on company
staffing not
available
Company 3 Management/ Crew Large international Incorporated in Mixed-flag fleet N/A
management fleet and 7,500 1974 and giant
crew members. network
Global
Company 4 Management 20 vessels . Information not Mixed-flag fleet Participating
Information on available
staffing not
available
Company 5 Owner/Operator 52 vessels; 1000 Started in 1909 Mixed-flag fleet Non participant
sea staff and 400 and giant
shore staff (UK). network
Global
Company 6 Managers Information not Information not Information not N/A
available available available
Company 7 Recruitment and Trains for a wide Information not Information not N/A
training range of clients available available
including Maritime
London and Trinity
House
Company 8 Manning Provides manning Over 20 years N/A N/A
solutions for experience
companies
worldwide
Company 9 Training Ave. 700 cadets in Established in N/A N/A
training each year; 1981
51% of UK’s cadet
recruitment.
Company 10 Owner/Operator 336 ships; 1200 sea Started in 1977 Mixed-flag fleet Participating
staff. Global and giant
network
Company 11 Manager/Crewing 29 vessels . Information not Mixed-flag fleet N/A
Information on available
staffing not
available
Company 12 Owner/Manager. 200 vessels . Old family UK flagged Participating
Information on company;
staffing not started 1880
available
Company 13 Manager 67 vessels; 400 sea Establis hed in Mixed-flag fleet N/A
staff 1919
- 83 -
Company Code Business Function Size History Ships’ Flag Tonnage tax
Company 14 Owner/Operator 7 ships. Started in 2002 UK flagged Participating

Information on
staffing not
available
Company 15 Owner/Operator 9 vessels; 70 shore Established in Mixed-flag fleet Non participating
staff and 350 sea 2000
staff
Company 16 Marine services Provides services Started in 1847. Serves mixed- N/A
company. to a wide range of Old family flag fleet
Transformed from clients both public company
owning company and private
Company 17 Owner/Operator/ 60 vessels . Old family Mixed-flag fleet Non participating
Manager Information on company
staffing not
available
Company 19 Owner/Operator 500 vessels; Started in 1904 Mixed-flag fleet Participating
110,000 and giant
employees; in 130 network
countries
Company 20 Manager 90vessels and more Established in Mixed-flag fleet N/A

that 4000 sea staff 1983
worldwide
Company 21 Training (Non- One of the largest Started in 1978 N/A N/A
profit) in the UK
Company 22 Manager Over 900 ships; Established in Mixed-flag fleet N/A
1,350 shore staff 1984
and 23,000 sea
staff.
Company 23 Owner/Manager 13 vessels . Started in 1730; Mixed-flag fleet Participating
Information on the oldest
staffing not family Britis h
available shipping
company
Company 24 Owner/Operator/Ma Wide range of Established in Mixed-flag fleet Information not
nager fleets. Operates in 1807 available
32 countries.
Information on
staffing not
available
Company 25 Owner/Operator 144 ships; operates More than 150 Mixed-flag Information not
in 100 countries; year old fleet; global available
8000 staff network
Source: Author
The differences between the companies included in my sample mainly relate to the size
of the company in terms the size of operated and/or owned fleet and staff size, the
specialisation of the company, namely, whether it is a management, owner/operator or
managing company, the age and historical background of the company and the
registration of its fleet. All these differences, as explained earlier, might be expected to
- 84 -
significantly influence management attitude and approach towards crewing and cadet
training practices. In designing the sample I therefore tried as much as possible to
include as many variations as possible in order to compare the different approaches and
attitudes adopted by different companies towards officer recruitment and employment
and their response to the tonnage tax MTO.
(ii) Training Institutions
As the parties directly involved in, and responsible for, the training of cadets,
administrators and staff in cadet colleges were of central importance to the study. It was
essential, for example, to discuss issues relating to the process of cadet training - both in
college and at sea - and to examine the structure of the training programme and assess
trends in cadet intake levels in order to evaluate the impact of the MTO on the
recruitment and training of cadets.
There are four main cadet training institutions in the UK which are strategically spread
around the country in order to tap into the seafaring potential and cater for the training
needs of the entire country. In most cases these colleges have affiliations with nearby
universities with which they share expertise and facilities. Some of these colleges have
developed joint programmes leading to various graduate degrees in nautical sciences
and maritime business management. Their primary task is, however, training officer
cadets for the shipping industry. Generally, the course for an officer cadet takes three to
four years after which the cadet obtains a third mate’s Officer of the Watch (OOW)
ticket and becomes a qualified junior deck officer of engineer. There are three different
entry points and training paths for the cadets depending on the individual’s entry
qualifications, namely, Higher National Diploma (HND), Foundation Degree (FD) and
Bachelor of Science (B.Sc.).
The training academic year begins in September and the programme is structured into
periods of theory interspersed with periods of practical experience at sea (see appendix
seven). This is designed to ensure that, by the end of the training, cadets are sufficiently
equipped with both theoretical and practical knowledge and skills in shipping and
seafaring and an initial experience of life at sea. My target data sources in the colleges
comprised those people directly involved in the process of cadet admission and training.
I specifically interviewed two cadet training officers and teaching staff in addition to
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several informal interviews in two colleges as I wanted to find out about the structure of
cadet training in the UK, cadet training programmes and any problems in the training
process in order to determine why it was difficult to increase the number of qualified
junior officers.
I only interviewed staff in two colleges because of difficulty in gaining access to the
institutions. The data collection process with the colleges included an exploration of the
training schemes offered, the different paths followed by the cadets, the various entry
points and the structure of the programme. It also involved collecting views on the
MTO and its impact on cadet enrolment. An important area of exploration was also the
recruitment, allocation and funding arrangements made between shipping companies,
training agencies and the colleges. I also asked college staff about the issue of cadet
‘wastage’ focussing on likely periods of ‘drop out’ and the possible reasons for cadets’
decisions to withdraw from training.
(iii) Cadets
In the course of the research it became clear that one reason for the failure of the MTO
to increase the number of officers was cadet ‘wastage’. Many companies said that
British people were not willing to work at sea, however it was also suggested that
candidates may leave early because they discern that they have no future prospects. The
reasons for cadet ‘wastage’ seemed important in arriving at an understanding of why the
MTO was failing to deliver. I therefore decided to include some cadet interviews in the
study although this was not in the original research design.
Subsequently the cadet data became of central importance to the study. It would help to
explain the reasons why training levels and junior officer out-put levels had not
increased despite the tonnage tax. The main area of exploration, in the cadet interviews,
included the motivation of cadets to take-up training, their expectations at the beginning
and their experiences of training. Because it was becoming clear, by this time, that the
main problem hindering efforts to increase junior officers was high cadet dropout rates,
I selected and interviewed only ex-cadets because it was essential to find out, through
‘first-person’ accounts, what factors influenced cadets’ decisions to drop out of training
prematurely.
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The identification and recruitment of cadets was highly challenging. This was due to the
fact that, having withdrawn from the programme, they all went different ways and only
a few remained within the shipping industry. However, I was fortunate in that I
requested and received assistance from some of the college administrators who kindly
agreed to identify some of their ex-cadets for me. The next hurdle was how to contact
them. The colleges were not willing to give me a list with their contact details for fear of
breaching data protection laws. The solution that I found was to draft the ‘access request
letter’ which was then forwarded to the various ex-cadets by the college administrators.
Luckily a number of them responded positively, either directly to me or through my
college contacts.
Thirteen of the fifteen cadets I interviewed were aged between 16 and 20 years and had
joined the cadet training programme soon after completing their GCSE or A-Levels.
Eight of them came from families with a shipping and seafaring background and had
therefore been influenced by parents, relatives or friends in their decision to join the
profession. After dropping out of the programme, only two went into maritime related
fields. Four of them had chosen to go to the university to develop a totally different
career path; three had joined different commercial training programmes and the
remaining six found jobs in different fields. The two who had chosen to stay within the
industry had been assimilated into graduate trainee programmes by shore-side maritime
related companies.
(iv) Others
Grouping the following data sources in the ‘others’ category should not, by any means
be taken to mean that they were not as important as the rest. The reason is that this is a
collection of ‘single-category’ bodies which could not fit in any of the categories
described earlier and could not be discussed individually without resulting in the risk of
disclosure of their specific identities. This category comprises government policy
officials, seafarer union officials, and various persons from both government and
industry training agencies and bodies. For ethical reasons I have to be vague in the way
I describe some of these bodies hence the use of such descriptions as ‘various persons
from both government and industry training agencies’. To say more would risk
revealing their individual identities, to those who are well- informed about the sector.
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In the case of government officials, I contacted and interviewed policy officials in

departments that are immediately related to shipping and have a connection to the
tonnage tax. The aim was to find out how the government understood the decline in the
industry and how it had gone about designing its response. I also wanted to find out
what the government thought about the impact of the tonnage tax. In the case of union
officials I targeted top officials of UK based seafarer unions. The reason for
interviewing union officials was to determine the unions’ role in the design of the
tonnage tax, being one of the major maritime stake holders involved in the consultative
process, to understand what they had done to make sure that the problem of declining
seafaring skills in the UK was adequately addressed. Others were bodies, organisations
and agencies directly concerned with the implementation of the tonnage tax, especially,
the Minimum Training Obligation (MTO).
4.4 Data Analysis

My data analysis, as I have indicated earlier, was in two phases. I conducted a
preliminary analysis of every interview soon after it had ended in which I consolidated
my recollections of the session and reviewed the recordings of the interview. From this I
was able to make comprehensive notes of my initial thoughts and I found that this
helped me to improve and refine my approach to subsequent interviews. My fieldwork
was therefore a process involving dynamic and continuous adjustment and refinement.
During the data collection period and in spaces between interview appointments I made
a point of going over the voice recordings of previous interviews so as to become as
familiar with the data as possible. During these ‘listenings’ I kept revising, refining and
expanding my thoughts on the various emerging themes. This meant that by the time I
conducted the main and comprehensive analysis, I was very conversant with the data
and some of the major themes that had emerged in the course of its collection.
Interview transcription started half-way through my data collection phase. Although I

had the option of engaging the services of a professional transcription expert, which
would have made the exercise faster and easier, I decided that it was best to transcribe
my interviews myself in order to increase my interaction with the data prior to analysis.
The transcription for each recording was reasonably comprehensive. However, it was
time consuming and it took me an average of eight hours for every one hour of recorded
interview.
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The method I employed for data analysis was categorisation and cross-thematic analysis
as described by Strauss (1987) and Spradley (1979). It involved developing a coding
process and an analysis of individual nodes (themes) followed by a rigorous cross
thematic analysis. In the coding process I used NVivo which is a computer-based data
analysis programme. Having designated the various thematic categories I dissected my
interview transcripts into thematic paragraphs then dragged and dropped relevant
paragraphs from all transcripts to each thematic category (code). After this I conducted
a thorough cross-thematic examination and analysis in order to establish links and
patterns of meaning (see Dey, 1993; Strauss & Corbin, 1998). I examined similarities,
meaning, nuances, inconsistencies and variances (Coffey and Atkinson, 1996; Atkinson,
and Coffey, 1997). For example I was able to analyse and compare what company
managers said about their officer recruitment policies (code 1) and how they went about
cadet recruitment (code 2) and training (code 3) in the UK in order to determine how the
three related. This cross-thematic data analysis enabled me to engage with, and
rigorously interrogate the data and begin to build theories and meaning around my
various research questions. This also helped me to identify the paragraphs which I later
used to illustrate my main findings.
The importance of using computer assisted qualitative data analysis software such as
NVivo can not be overstated. It made the whole exercise of organising, coding, and
categorising the data, into distinct themes, easy and quick. Some of the traditional
methods for doing the same, for example, the ‘shoe-box’ approach, cutting and pasting
and colour coding, would have taken me a long time. The other added advantage with
using NVivo was that it combined all these other approaches such as ‘cut and paste’,
‘shoe-box’ and ‘colour coding’ into an intricately integrated but quick and easy-to-use
package. The cut, drag and drop facility made it easy to develop thematic categories and
identify useful illustrative paragraphs.
Although I originally designated the period for the comprehensive analysis as October
2006 and February 2007, the process continued through-out the write- up stage (March
to October 2007) because there were constant and continuous follow-ups to update the
data. At the same time, as the data chapters progressed, it was necessary to revisit earlier
interpretations in line with new developments. My data analysis was therefore a
continuing process spanning the entire period of the study.
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4.5 Challenges, Limitations and Ethical Considerations
My study was relatively free from major problems and it progressed relatively smoothly.
There were some challenges, however, which emerged during the process of negotiating
access to the various participants. Out of 90 letters I sent out to companies, training
institutions and government departments requesting appointments for interviews only
15 actually replied but of these only seven were positive. Arranging interviews therefore
required a lot of follow-up phone calls and e-mails. Most of those people who were
approached in this way eventually gave me appointments and subsequently took part in
the study. Some however declined to participate citing either company policy or busy
schedules. From the initial batch of letters I sent I finally managed to get the 50
participants who provided the core interview data for the study.
This meant two things. Firstly, negotiation of access took a lot more time than I had
initially allocated and therefore put the project under immense pressure due to the
limited nature of my funding. Second ly, the numbers of people who declined to
participate meant that I did not interview as many participants as I would have wanted.
Given that there are not very many shipping companies left in the UK, this presented a
big problem. However, considering the amount of rich data that I was able to collect
form the 50, the damage caused by the declined access was reasonably well mitigated.
One of the greatest challenges was my time limit for the completion and submission of
the thesis which limited the scope and depth of the investigation. The study was
conducted under the financial sponsorship of the Nippon Foundation which provided
funding for three years which included two semesters studying for a diploma in research
methods. This meant that time, which is often a problem for research students, was a
particular limitation for me. With more time I could have reached more shipping
companies and even extended the research to include some of the main shore-side firms
affected by the shortage of maritime skills. I could also have included interviews with
policy makers at the EU level in order to explore the EC policy on shipping skills and
the possibility of an EU answer to the problem.
As the thesis unfolded it became apparent that an important unforeseen element of it

was the need to explain the problem of high cadet wastage. In retrospect, and knowing
this now, I would have liked to interview more ex-cadets and would also have liked to
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include, in my research design, a few interviews with cadets in training, especially in

their final stages of training so as to compare their experiences with those of ex-cadets.
As it was I was happy to be able to include a small number of ex-cadet interviews in the
study. These were particularly difficult to arrange because of the inadequate record
keeping in colleges, especially, regarding cadet dropout. Colleges do not seem to pay
much attention to the cadets who decide to quit. For example, neither the colleges nor
the various training agencies and sponsoring companies conduct follow-up discharge
procedures through which they monitor and determine the reasons for dropping out.
Such data, perhaps in the form of completed discharge forms, would have been very
useful and could have made my work much easier and made the data richer. Ultimately
therefore I was pleased to achieve fifteen interviews with this difficult-to-reach group of
people. I had sent out a total of 30 letters to ex-cadets through two colleges.
The fieldwork also involved a lot of time-consuming and costly travelling (and
accommodation) because my participants were spread across different parts of the
country. In some cases I found that it was impractical to reach the ‘base’ of an identified
interviewee because of its remoteness, for example, when travelling on public transport
and unreasonably high associated costs. In two such cases I resorted to telephone
interviews. One important observation I made about using telephone, as opposed to
face-to-face interviews, was that, although it is a useful tool for quick follow-ups, it is
not very appropriate for ‘main’ interviews. Based on my experiment with this mode of
interviewing, the telephone interview tends to remove the ‘person’ and the
‘surrounding’ from the interview thus limiting the depth of ‘understanding’ for the
interviewee. As an interviewee I found that I lost the benefit of essential non-verbal
communication and the general information that maybe gained by observing the
interviewee’s place of work. Furthermore, the ‘mechanical’ nature of this approach did
not allow for a relaxed session since it imposed a certain sense of hurry. Consequently
my telephone interviews lasted about 30 minutes each as opposed to an average one
hour for the face-to-face interviews (see Frey and Sabine, 1995 for a detailed discussion
on telephone interviews).
Other minor challenges include the few times when the participants declined to allow
me to use a voice recorder and, although I was able to take down notes, I could not write
fast enough while still concentrating on guiding and directing the interview session. In
such cases the sessions were rather uncomfortable and a lot of valuable data was lost
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because my memory could not retain all of the discussion and I could not effectively
take notes.
Although the research process was relatively straight forward I had to be constantly
aware of the possible ethical implications of every step I took, right from the point of
negotiating access to the write-up and reporting stage. For instance, I had to ensure that
the purpose of the research was clearly and unambiguously spelt out to the interviewees
before they made- up their minds to participate. I also clearly explained how the data
would be used so that they made a properly informed decision on whether to participate.
One important reason for observing ethical regulations in research is to protect the
interviewees as well as to ensure the validity of the data collected (Dingwall, 1997;
Payne and Payne, 2004). I therefore took pains to make sure that the participants were
happy and comfortable with every step of the process. As I have said, however, this
presented no big problem because most of my interviewees were highly educated and
professionally experienced people. Furthermore, by the time we got to the actual
interview session stage, we had gone through a lengthy process of correspondence
involving e- mails, phone calls and (postal) letters which clarified the research to the
participants.
Before every interview I informed the interviewees, verbally, about my intention to

record the conversation and requested their permission to do so. If they declined, as it
happened in a few cases, I did not go ahead with the recording. I also explained to them
that they had the right to decline to answer any question they found uncomfortable or
compromising, whether personally or professionally. In the few times when I had to
conduct the interviews by telephone I made sure that I asked the interviewees if I could
record the conversation. When they gave their consent, I informed them when I
switched on the recorder and at the end I informed them when I switched it off.
A more complex challenge was with ensuring that my line of interviewing did not
provoke bitter memories and sad emotions in the ex-cadets with whom I needed to
explore their personal training experiences. In order to mitigate any such outcome I took
a lot of care in the way I put the questions across and the way I reacted to and reinforced
their responses. I also stressed the fact that they were free to decline to answer any
question and ma y withdraw from the process at any point. Fortunately no such incidents
occurred and the interviews were smooth and productive.
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A big ethical challenge for any researcher is how to conceal the identity of the
interviewees at the write-up and reporting state. I have managed to overcome this hurdle
by carefully ‘anonymising’ the identities of the participants, and the various
organisations and institutions they represent, in all my chapters and conference papers
and presentations. In order to eliminate any chance of identification I ha ve constructed
the anonymity in such a way that even the wider context does not, suggest the identities
of either the organisation or the individual.
Considering all these issues, I approached every step of my research and write- up well
aware of my duties and responsibilities towards the participants and sources, the
research community, the data, and, my sponsors. I relied extensively on the guidelines
of the British Sociological Association (BSA) Ethical Procedures (BSA, 2002) and
also sought the approval and guidance of the Cardiff University School of Social
Sciences (SOCSI) Ethics Committee to whom I submitted my research proposal
including an outline of my methods and obtained approval before commencing the data
collection (see Appendix four).
4.6 Summary: Methods and Questions

The research approach and methods outlined in this chapter were carefully and
deliberately chosen to ensure that the data collected exhaustively answered the research
questions posed. It is for this reason that the study employed a mixed method approach
to data collection. The two main methods include interviews and policy document
analysis.
By subjecting government policy documents to extensive document analysis rich data

was extracted which helped to explain how the government viewed the problem of
decline in officer numbers and the decline of UK fleet revealed the government’s
commitment to recovering the fleet and the seafarer pool. Combined with interview data
collected from government officials and seafarer union officials, this method produced
data which I have used to effectively answer questions about the nature and form of
government response to the decline. The documents provide an insight into government
thinking and the understanding of the decline and explain the conception and
development of the response. The data generated by this method is mainly used to
inform the development of chapter five.
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This chapter specifically addresses the first research question about how the government
has responded to the globalisation of shipping by discussing the shape of the
government’s response strategy and the process leading to its design and adoption. It
traces the development and adoption of the strategy and describes the government’s all-
inclusive consultative approach which involved all the major industry stakeholders.
The interview approach, on the other ha nd, generated very important information about
companies’ responses to the tonnage tax and the Minimum Training Obligation with
reference to their officer recruitment and employment policies. The data collected by
way of interviews is predominantly used to inform the development of chapters six and
seven in which the questions about the performance of the strategy and the training
atmosphere are addressed. Chapter six addresses research questions two and three, that
is,
(ii) What shaped the government response? And
It examines the role of shipping company recruitment policies in influencing the shape
of state response strategies and their impact on cadet recruitment and training.
The interview approach was also the main instrument for collecting data from ex-cadets.
Through interviews the cadets were able to give their persona l accounts of the training
process and their experiences of training at sea and in college. An analysis of these data,
alongside the interview data from training administrators and managers provides further
indication of why the minimum training obligation has not succeeded in increasing the
number of junior officers in the UK. Interviews with government and union officials, as
well as industry representatives, provided important indications of some of the main
obstacles impeding effective state response and intervention to recover and restore the
strength of the British seafaring pool. This data was especially valuable in answering
the final research question, that is: How could the response have been more effective?
This question is discussed in chapter seven which extens ively examines companies’
attitude to cadet training and how cadets experience their training. By highlighting some
of the shortcomings in the government strategy and examining the obstacles hindering
effective state response the chapter tries to suggest how the response might have been
made to work more effectively.
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Finally, the statistical secondary data analysis provided the figures to illustrate the
trends in the shipping industry over the past three decades. These figures clearly show
the extensive decline in the industry and also the trends after the introduction of the
tonnage tax thus setting the context for in-depth analysis and discussion on the
effectiveness of the strategy. The secondary data analysis approach therefore provides
the essential statistical illustration which strengthens the arguments and discussions
throughout the thesis.
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CHAPTER FIVE
State Strategies
Introduction
The shipping industry has experienced accelerated globalisation over the past three
decades leading to a greater diversification and concentration of shipping activities
around the world. The consequence of such restructuring has been the decline of former
maritime nations and the emergence of new centres of maritime business around the
world. As explained in previous chapters, the patterns in the global distribution of ship
registration have changed significantly with the growth of Open Registers leading to a
situation whereby the industry, unlike the early decades of the 20th century, is no longer
concentrated in, and dominated by, just a few European Traditional Maritime Nations.
The current, highly globalised landscape of the shipping industry has developed
alongside the wider globalising processes which have led to the removal of economic
barriers to capital and finance movement around the world. In this sense, the shipping
industry is a critical example of a globalised industry as argued by Sampson and Bloor
(2007) because shipping enjoys a greater capacity for international mobility than any
other industry by virtue of the fact that shipping capital assets are mobile. A good
illustration of this is the ease with which ship-owners can choose and change the
nationality of their ships without, for example, relocation costs.
One additional important feature that has developed in the industry as a direct
consequence of globalisation, international mobility of shipping capital and the
transborder operations of shipping companies, is the growth of an ‘open’ Global Labour
Market (GLM) for seafarers, which gives employers unrestricted access to cheap labour
drawn from the low-cost labour supply countries (Sampson, 2004; Kahveci and Nichols,
2006). Whereas labour is, generally, more locally organised seafaring labour has, within
the past three decades, been organised at a more global level than labour in any other
industry because shipping companies, in search of cheaper crewing alternatives, have
set up ‘satellite’ crew management companies which facilitate the operation of a
globalised seafarers’ market (Wu, 2004).
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While such developments have beneficial effects for shipping companies, they have
negatively affected some national shipping industries and domestic seafarer labour
markets, especially, in the high-cost industrialised states. These states have experienced
a drastic and steady decline in their national fleets and seafarer labour since mid-1970s
which has led to diminished fleets and shrunken pools of qualified officers and depleted
maritime skills bases. The decline in local seafaring labour happened, largely because,
as ship-owners sought cheaper foreign labour, demand for national officers declined and
ship-owners were no longer interested in recruiting and training cadets in their ‘home’
countries. The UK shipping industry is an excellent example of this demonstrating a
huge decline, both in fleet and skills during the period since 1970s. The number of
British seafarers employed on-board UK registered ships, according to Chamber of
Shipping statistics, dropped from nearly 99,000 to 27,000 between 1970 and 1993. The
number of officers declined from 45,600 to 12,080 within this period (see Obando-
Rojas et al 1999).
The problem that faced British government s from the mid-1990s as a result of declining
numbers of qualified British officers is complex. Apart from declining qualified sea
staff, the UK was losing much of its general maritime skills base, that is, the people
with the required skills to work in shore-side maritime related firms (Gardner and Pettit,
1996; Pettit and Gardner, 1999; Gardne r et al, 2004). The government was concerned
that if the decline continued there would be a shortage of essential technical skills which
would prompt many firms to consider shifting their operations to overseas locations
where they could access the required skills at lower prices. The other major concern was
about the decline in the number of qualified and available people with the skills and
experience to operate UK vessels in times of war. The argument was that as an island
nation the UK required a substantial pool of qualified officers for this purpose.
Traditionally skills for the shore-side maritime clusters always came from the sea.
People were trained as seafarers; they worked at sea as officers for a number of years,
gained experience and moved ashore thus transferring the essential technical skills to
the wider maritime cluster. Also, in times of war, the government calls on national
merchant vessels to boost the country’s naval capacity. The effective contribution of the
merchant navy in such times depends on an abundant supply of qualified and
experienced national officers. The capacity of the UK merchant navy to maintain such
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pool of staff and supply skills for the shore had diminished drastically with the
depletion of the fleet.
Diminished training opportunities, coupled with massive lay-offs of British seafarers, in

the 1970s and 1980s as employers sought cheaper labour elsewhere, not only
undermined and destroyed the seafaring tradition in the UK (Obando-Rojas et al, 1999)
but also, created the impression that seafaring was no longer a profession with good
career prospects for British people. This led to the emergence and spread of the
perception that seafaring had become a ‘third-world’ occupation in many circles of the
industry. A government official explained:
Part of the government’s plan is to correct the notion that seafaring jobs are
only suited or available for foreign seafarers. This is not true and if it is left
to continue it will destroy Britain’s seafaring tradition [Government
Interview]
In order to correct the situation an effective state strategy was needed to address both
the demand and supply aspects of the problem. On the supply side there was a need to
‘re- ignite’ the seafaring spirit of the British people and encourage more young people to
train for the profession. State involvement in this aspect was necessary because there
was a clear market failure in the development and replenishment of skills to the industry
both ashore and afloat. It was then necessary to provide opportunities in the form of
adequate funding and training facilities. Most importantly, the strategy needed to ensure
a high rate of trainee retention; a problem which had greatly affected the profession in
recent years (BIMCO/ISF, 2005). Moreover, employment opportunities had to be made
available for qualifying junior officers so that they could work at sea and gain the
required experience to replenish skills for the shore-side maritime industries.
In this chapter I will examine the tonnage tax, as the gove rnment’s main response and
the identified problems. I will draw on material from a number of sources: Government
policy documents which detail the process of designing and adopting the response.
These documents include The European Commission paper, Towards a New Maritime
Strategy, 1996, the March 1998 report of the Shipping Working Group (SWG), the
government White Paper: The Future of Transport, 1998, the Government White Paper:
British Shipping - Charting a New Course, 1998, the Alexander Report, 1999, and the
Finance Acts of 2000 and 2004 (See a more detailed list in chapter four). I will also rely
on interview data from the various major stakeholders involved in the consultative
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design process including government officials, shipping industry managers and seafarer
union officials. The chapter lays out a complex web of conflicting interests, including
corporate capital interests and labour interests, and examines the government’s
approach to the development of a common strategy for the recovery of British shipping.
This chapter is organised into seven broad sections. Section one briefly considers the
erosive impact of globalisation on the national seafaring labour markets of TMNs so as
to set the context for the analysis with reference to the UK. Section two examines the
state’s motivation to intervene in the decline, especially, in a private sector industry in
an era of free markets. Section three is an exploration of the government’s interpretation
of the problem, and its causes, and a description of the process by which the response
was designed and adopted. Section four examines how the government arrived at this
strategy and describes the consultative process employed. Section five considers the
complex web of conflicting interests involved in the process as a result of the
involvement of parties with opposing interests, that is, the corporate shipping industry
and the labour unions. Section six describes the various initiatives, including the
tonnage tax, which comprise the government’s strategy and, finally section seven
provides a brief assessment of the impact of the strategy.
5.1 Globalisation and the Decline in shipping Labour

Although the forces of economic globalisation have greatly diminished national
economic barriers in the past four decades, labour is yet to enjoy the same global
mobility that capital and finance enjoy. In the main, labour continues to be locally and
nationally organised and the state still wields immense regulatory control through
immigration restrictions across borders (Holton, 1998). Other obstacles like cultural,
and language barriers, and variations in the education, training and qualification systems
of different countries also restrict the international movement of labour (Lauder and
Brown, 2006). However, in shipping, the growth of the Global Labour Market for
seafarers has significantly increased the mobility of seafarers in the past few years (Wu,
2004). Furthermore, the mobile nature of seafaring employment, combined with the
international harmonisation of training and certification in the profession and the use of
English as the accepted international language of seafaring, defines seafaring in
distinctive ways.
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The relative freedom enjoyed by labour in the shipping industry must however be
understood within a certain context. It is not to be equated to or compared with the kind
of international mobility that shipping capital enjoys. Whereas increasing mobility for
capital has brought increased global ‘political’ influence for shipping companies, the
same has not been the case with seafaring labour. Yet, seafaring labour and the changes
that have taken place in the seafarers’ labour market provide an unusual example of how
globalisation could transform labour.
The relationship between state, global capital and labour, with regard to the shipping
industry, differs in one important aspect from other industries. In shipping, the
combination of mobile capital assets and a labour force that must, of necessity, be
mobile has led to a situation whereby, without physically relocating overseas, shipping
multinationals are able to draw cheaper labour from low-cost developing countries. This
means that shipping companies are unusually placed to benefit from the best of both the
industrialised, advanced countries and the less developed countries. They benefit from
the advanced sophisticated financial and management facilities in the north as well as
the low-cost flag-regimes and cheap labour in the south in maximising their profits. A
British ship-owner, for example, manages ships from London and benefits from the
advanced management and financial infrastructure offered by the City of London but
can operate ships under a low-cost flag-regime and get labour cheaply from Asia or
Eastern Europe. This is so because UK-based shipping companies are not obliged to
employ seafarers from the UK, a fact that has, over the past three decades, negatively
impacted upon the British pool of seafarers and led to a huge decline in this pool of
employees (Brownrigg et al, 2001; Selkou and Roe, 2002; Gardner et al, 2004).
Although shipping labour has always been more mobile, relative to many other
industries, this mobility has become more pronounced in the past few decades as a
result of the increased mobility of shipping capital. Furthermore, most ship-owning
countries have either abandoned or significantly relaxed their crew nationality
requirements (Alderton et al, 2004) due to growing pressure from shipping companies
seeking to employ cheaper foreign crews hence allowing ship-owners to source labour
internationally. A few countries like China, India, Taiwan, Italy and Norway still
require that either all or a certain proportion of the crew on-board their ships are their
own nationals. However, when considering that more than 51% of the global fleet is
registered with Open Registers (UNCTAD, 2006) and that most of the advanced nations
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have eliminated such requirements, there is little doubt that the majority of seafarers
serve on-board foreign registered ships. This practice is growing as more and more
seafarers join the emerging, and fast expanding, global labour market for seafarers
(Alderton et al, 2004; Wu, 2004, 2005; Wu and Morris, 2006).
As a result, the number of seafarers from high-cost OECD countries has declined and,
although OECD officers still play an important role in staffing the global fleet, most of
them are nearing retirement. Their number is also much smaller as compared to the
large number of junior and middle-rank officers from developing labour-supply
countries (BIMCO/ISF, 2005). This declining trend is threatening the maritime skills
level of many TMNs and by extension their entire maritime sectors. These sectors
depend heavily on people with seafaring skills and experience for employment in shore-
side maritime related firms providing essential services to the ind ustry (Gardner et al,
2004).
The UK government’s concern is that the pool of qualified British officers is not
sufficient to sustain the growing need for essential technical skills in the shore-side
maritime sector. At the same time there is concern that without increasing the supply of
junior officers the existing pool will not be able to sustain the anticipated growth in the
UK fleet following the recovery strategies that the government has adopted over the
past decade. The government, therefore, considers the decline to have reached critically
low levels and fears that, with time, the sector will face an acute skills shortage which
might force many shore-side maritime operators, especially those within the core
maritime cluster, to relocate to overseas destinations (DETR, 1998).
The Alexander Report, which, following the publishing of the government shipping
policy document; Charting a New Course, investigated the possibility of introducing a
tonnage tax as the main recovery strategy, clearly recognised the importance of
seafaring and the dangers of falling numbers of British officers. It states that:
Our shipping industry and the skills of our seafarers have long been part of
our success as a trading nation…. Without a revival, especially of the
number of trained officers, there will soon be a shortfall well below the
needs of the shipping and shore-based related maritime industries
[Alexander Report, p.3].
For the purposes of this thesis, I focus attention on the decline in the numbers of officers
rather than ratings. This is because the UK as a supplier of ratings has long ceased to be
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competitive because of the increasing dominance of low-wage labour supply counties in

this market. The UK does not see any need to compete in the supply of ratings and is,
instead, working on ways of promoting ratings, through further, accelerated training, to
become officers (DETR, 1998).
The decline in officer numbers clearly presents a major concern for the government
because of falling levels of maritime skills and the threat that with insufficient maritime
skills, Britain would cease to be the world’s leading shipping centre. The shipping
policy White Paper; Charting a New Course explains:
….present day seafaring skills still underpin Britain’s leadership in many

interna tional [shipping] businesses [Charting a new Course, p.1]
From the wording of the policy document, there seems to be clear recognition of the
danger that the decline in the numbers of qualified officers and the lack of cadet training
will eventually lead to the demise of British shipping and the entire maritime sector in
the UK. Seemingly, the government also recognises the fact that the decline is driven by
forces of an international rather than national nature, specifically, forces of economic
globalisation and changing international demand and supply patterns. There is, therefore,
a recognition that effective counter measures must be designed to take into
consideration important developments in the shipping industry globally. The
government document goes on to say:
The globalisation of the world economy has reinforced the inherent and
unique internationalism and fluidity of the shipping industry…..As a result,
the UK shipping industry has faced growing low-cost competition abroad -
especially from fleets of the newly industrialised countries of the Far East
and increasingly from ships crewed with both officers and ratings from
South East Asia and from the former Soviet bloc…..the decline in the UK
merchant navy has been steeper than in many others, and has accelerated
over the last couple of years ……ship-owners have found it too expensive
to continue to operate with British seafarers…….Against a background of
increasing globalisation, key contributors to this situation are: the impact of
unequal competition; labour and regulatory costs; and flag competition
[Charting a New Course, p.11].
In the following section I briefly examine the motivation behind the UK government’s
intervention in the decline in the number of national seafarers. There was of course
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always the ‘Ricardian’ 2 choice of concentrating in areas where the UK would have
comparative advantage and let those countries better place to supply labour do so as
suggested by Selkou and Roe (2002). However, state policy attempted to ensure an
increased supply of British seafaring officers.
5.2 The Case for Government Policy

The state’s interest in the shipping industry was discussed, in chapter three, with the
conclusion that states have great interest in the industry for both strategic and
commercial reasons. States, especially the Traditional Maritime Nations, have had an
interest in shipping for many centuries and have, at one time or other, registered and
owned large and strong merchant navies, which have served their military and conquest
purposes in times of war and trade, and their economic purposes in times of peace. It is
with large and strong naval forces that political and economic empires have been built.
The prosperity of the global economy largely depends on efficient transport, especially
shipping, since over 95% of world trade is transported by sea (see DETR, 1998). A
large, efficient and strong merchant navy may facilitate success in international trade
relations and secure a greater share of its benefits. Lord Alexander observes, concerning
British shipping, that:
[The] shipping industry and the skills of our seafarers have been a crucial
part of our success as a trading nation…..But concern for a strong shipping
industry is not just rooted in nostalgia. For, with the growth of world trade,
the shipping industry is continuing to expand globally. Not surprisingly,
many countries prize a successful shipping industry and want to share in this
growth [The Alexander Report, p.3].
At the same time, and perhaps more importantly, states, like the UK, benefit from the
large number of shore-side maritime related businesses that shipping supports as well as
the employment it creates. Although some of these countries still quote strategic and
national security as reasons for their interest in shipping, nowadays the state’s interest is
mainly driven by economic interests. Many Traditional Maritime Nations have, in the
2
This is based on the theory of comparative advantage, developed by David Ricardo in the early 19th
Century. It states that countries should concentrate in producing and exporting goods in areas where they
enjoy the highest comparative advantage.
- 103 -
past few decades, gone out of their way to protect national shipping industries with
various tax policies.
As far as national economies are concerned, shipping is therefore a commercial catalyst,

not just in the growth of maritime activities, but also to the entire economy of a nation.
It is also a big revenue source for governments. In the UK, for example, the shipping
industry is ranked as the fourth largest service-sector exporter, greater than
telecommunications, film and television, and computer services and 95% of UK trade is
carried by sea (DETR, 1998). It is for this reason that Charting a New Course, the UK’s
shipping policy paper states that:
The Government attaches great importance to the UK shipping industry……

[and] does not accept that the long decline in the British merchant navy
should simply be allowed to continue. It seems inconceivable [to me] that,
as an island nation, we could contemplate abandoning our historic
involvement with the sea [Charting a New Course, p.3]
The policy paper continues to underscore the importance of shipping to the UK’s
economy, which it considers both unique and greater in comparison to many other
industries. It summarises what the government considers to be the industry’s main areas
of importance as follows:
Shipping has an importance for the UK which differentiates it from other

industries….. Efficient shipping is vital to our economic well-being: 95% of
our external trade by weight (77% by value) and 7% of domestic freight
tonnage (but around 25% in terms of tonne kilometres), moves by water.
The competitiveness of our exporters and importers requires that
international shipping markets are open and not unnecessarily expensive.
[Charting a New Course, p.4].
For similar reasons, the different Traditional Maritime Nations have responded in
various ways to the decline of their shipping industries. The UK’s strategy and the
motivations behind it are well documented in the policy paper and, seemingly, the
government admits that the huge decline in the industry is partly because it had been
neglected for a long time by successive governments. It seems that, in the 1990s, the
government came to a realisation that the country stood to lose the benefits of an
industry which previous governments had taken for granted. One government policy
official explained in an interview:
It is unimaginable that we had let the industry decline so much but great
achievements have been made in the past five years….. Previous
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governments have neglected the industry and left ship-owners to face unfair
international competition leading to the decline we are facing…. This
government has however done a lot for shipping [Government Interview]
By the mid 1990s Britain had lost a large proportion of its registered trading fleet. It had
lost a large proportion of seafaring employment leading to an erosion of the local
seafaring skills base and was facing the threat of losing its core sho re-side maritime
related industries. All these areas needed to be addressed and corrected if the industry
was to be retained. The government, as evident from the policy document, decided that
direct economic intervention, mainly in the form of reduced corporation tax, was the
best way forward.
Whereas it seems clear why the government wanted to intervene and try to rebuild the
UK fleet, there are many people, in the industry, who have questioned the need to spend
a lot of effort and resources on rebuilding the pool of seafaring skills when the same can
be acquired easily and cheaply from abroad. Selkou and Roe (2002), for example, argue
that the UK has long lost its comparative advantage in the supply of seafaring skills and
feel that the government’s efforts are driven by nothing other than nostalgia. The
government, however, maintains that being an island nation and highly dependent on
international trade for survival, the UK must maintain a strong pool of seafaring skills
(see DETR, 1998). A government official explained:
We are an island nation and our trade with other nations largely relies on the
strength of our shipping. Without a strong merchant navy force the strength
of our shipping is gone [Government Interview]
Over 75% of industry managers interviewed supported the view that there is no use
trying to hold on to a pool of seafarers because, as one explained, “UK trade does not
necessarily depend on British staffed ships” [Shipping Company, Interview 1]. In the
words of another manager:
With or without British officers, ships will still sail and cargo will still
move” [Shipping Company, Interview 13]
Just like Selkou and Roe (2002), they also think that developing countries are better
placed to supply shipping labour while developed ones concentrate on the technology,
finance and management. The government, however, describes this position as short
sightedness. In response to these views a government official said:
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It is only those companies with a short-sighted approach to business who

promote such views. Many serious companies are working with us because
they recognise and support our view that a strong domestic shipping
industry is important to the British economy [Government Interview]
The government insists that it is essential to recover the UK seafaring labour pool
because as the fleet grows UK based operators will need UK national officers. Most
importantly, they say, a strong pool of qualified seafarers will maintain a steady supply
of essential technical skills to the shore-side cluster of firms which are essential for the
sector and the economy. The official went ahead to say that:
It is not only the deep sea businesses that stand to suffer from such short-
sightedness. It is already emerging that the decline in qualified officers is
affecting shore-side maritime firms because they are experiencing a
shortage of people with the essential technical skills [Government Interview]
The approach taken by the government for boosting skills and thus retaining the shore-
side maritime cluster of firms si to increase the supply of qualified and experienced
British officers. This argument is based on studies conducted by Cardiff University
(Gardner and Pettit, 1996), the London Guildhall University (McConville, 1997) and a
follow-up study by Cardiff University in (Pettit et al 2005) which clearly highlight the
problems of diminishing numbers of British seafarers, including the advanced age
profile of officers and the increasing demand for people with seafaring skills and
experience to work ashore.
The Shipping Working Group set up in 1997, by the Deputy Prime Minister (Mr. John
Prescott), to look into ways of reviving the industry emphasised the urgent need to halt
the erosion of seafaring skills and boost the general maritime skills base (DETR, 1998).
The British shipping policy document which drew upon the SWG report, also further
emphasised the need for appropriate strategies to achieve this revival. It explains:
The following measures, which draw on the proposals made by the Shipping
Working Group, are designed to increase the UK skills base, both by
increasing seafarer training through meeting the challenges of perception,
training promotion, funding and access to training berths; and by optimising
available and potential skills…..We need to assure ourselves of a continued
supply of people with seafaring skills and experience not merely to man our
ships but to fill a wide range of jobs in the shore-based maritime-related
sectors of the economy [Charting a New Course, p.22]
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The Alexander Report of 1999, which was the result of an independent enquiry into a
UK tonnage tax, as the main recovery strategy for the industry, also highlighted the
importance of a strong pool of UK national seafarers and stressed the urgent need to act.
It pointed out that:
The stock of skilled seafarers is dwindling and their average age is

increasing. Without a revival, especially of the number of trained officers,
there will soon be a shortfall well below the needs of the shipping and
shore-based related maritime industries [Alexander Report, p.3].
The point of emphasis seems to be that the wider maritime industry depends on the
shipping industry to recruit and train seafarers who would eventually come ashore to
sustain its operations, especially in the technical management areas. The policy
document continues to explain:
….the training has to be carried out by shipping companies, whereas the

ultimate end-user of seafaring skills is the shore-based maritime-related
sector [Charting a New Course, p.22]
So, the long decline in numbers and the ageing profile of the pool of qualified and
experienced officers means that the general maritime skills base is untenable. It also
seems clear from the wording of these documents that the government’s main concern
has been with the decline in the maritime skills base rather than the number of ‘active’
seafarers. The option for many shore-based maritime related companies, in the face of
declining technical skills, has been to look to overseas supply. Some have even
considered relocating operations in search of the skills. The Alexander report clearly
recognised this as a threat and stressed the need to retain the UK shore side maritime
industries by ensuring a sufficient supply of skills. It says :
I am obviously very aware of the importance and quality of these shore-

based City and law-based industries. Their value is well summarized by the
Baltic Exchange. London is the world's largest provider of maritime services
with a value assessed by British Invisibles of some £1.5-2 billion a year…..
[shore-side] agencies here are sustaining over 4,500 jobs, contributing £100
million in tax revenue, and bringing work to City firms which specialize in
services related to shipping……Without a national shipping industry and
the associated skills base, London's position as the world's biggest maritime
centre would be vulnerable [Alexander Report, p.17].
According to government policy officials taking part in the study, the problem of
shrinking and ageing pool of officers has become obvious. In the past decade, there has
been increased demand for people with seafaring skills and experience to work in
- 107 -
technical management positions in shore side maritime related firms. The number
and/or size of these firms has seemingly increased in the past few years as a result of the
condition built into the tonnage tax which requires all shipping companies wishing to
benefit from the tax to set-up strategic and commercial management bases in the UK.
One of the officials explained:
We have seen an increase in demand for people with sea going experience
to fill positions in the maritime related industries ashore, especially in the
past few years with the increase in the number of companies joining the
tonnage tax and moving their operations to our shores. If we do not find a
quick solution to this problem we risk losing the entire maritime sector. This
is beyond contemplation considering the importance of shipping to the UK
[Government Interview]
In an interview with one shipping company personnel manager he too suggested that the
industry could easily face a crisis soon by pointing out that his company was already
importing skills from overseas:
If you look out there you will see a very large number of foreigners…. We
have been forced to import all these people because it is becoming very hard
to get qualified British people to work in positions like technical marine
management and others……and it will certainly get worse [Shipping
Company, Interview 5]
However, although a few companies seemed concerned about a possible maritime skills
crisis, over 70% of my company interviewees did not seem very bothered. Many argued
that there will always be skills available even if not from the UK. A government source
however dismissed such views as “the discouraging short-termisim of the industry
which makes everything ever so complicated” [Government Interview].
The strength of the government’s argument for a stronger pool of qualified British
officers, therefore, seems to lie in the need to maintain a steady supply of shore-side
maritime skills. This problem was clearly highlighted in the Alexander Report. It
emphasised the need to boost the maritime skills base and stressed the central and
critical role that the shipping industry plays in the development and sustenance of such
skills:
The need for mo re officers is highlighted by the strength and requirements

of our shore-based infrastructure…. Most of these jobs were [always] filled
by the most fully trained officers with Class 1 certificates…. Practical
seafaring experience generally remains the key element in the mix of
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competences which is sought by shore-based sectors in appointing seafarers

[Alexander Report, p.17].
The focus for the state to intervene therefore seems clear; the shipping industry is
considered crucial to the economy and can not be left to disappear. Without restoring
the pool of national officers the country risks losing that very important shore-side
maritime cluster which, not only provides employment to millions of British people, but
also earns the country a lot of revenue and ensures the continued prosperity of UK’s
international trade. The objectives of the intervention strategies adopted were equally
well spelt out in the form of terms of reference for the Shipping Working Group:
• To enable the maximum economic and environment al benefit to be obtained

from shipping;
• To reverse the decline in the UK merchant fleet;
• To increase the employment and training of British seafarers; and
• To encourage ship-owners and the wider maritime industry to commit more

resources to seafarer training (DETR, 1998).
One essential point to explore, in the process of trying to understand the state’s response,
is the specific interpretation that the government gave to the problems of decline.
Because effective solutions often follow accurate interpretations of the causes of the
problem, it is important to try and examine the state’s diagnosis of the causes of this
particular problem. This is the main subject of the next section.
5.3 The Problem
Clearly, the state recognised the need to intervene and stop the decline in both tonnage
and seafaring labour. The state has maintained the argument that the decline poses a
threat to the future of British shipping, the survival and prosperity of the UK’s shore-
side maritime sector and the wellbeing of the general economy (DETR, 1998). The
effectiveness of any intervention strategy adopted by the government would, however,
be determined by the specific diagnosis of the problem. The government seems to have
adopted a simple narrative to explain the decline. This narrative describes a situation
where in the 1970s and 1980s, increasing operating costs and growing competition
- 109 -
pushed many British ship-owners to seek cheaper sources of labour overseas. In

addition to the decline in the UK fleet this led to a situation of diminished cadet training
capacity because shipping companies were no longer training British cadets. A
government official explained:
Companies in the 70s and 80s stopped training cadets in the UK because
they wanted to employ cheaper foreign labour so as to reduce costs.
Training completely stopped and previous governments did little to
encourage it. This is what the current government is trying to do: encourage
companies to recruit and train more UK cadets [Government Interview]
According to government policy officials participating in this study, the neglect of the
decline for a long time diminished the British seafaring tradition (see also Obando-
Rojas et al, 1999). The consequence was that many young people today know little
about seagoing careers and feel less inclined to go to sea in the face of many more
shore-based career alternatives. One policy official observed in an interview:
The decline in officer numbers is due to a combination of factors but most

importantly it has a long history behind it……the huge decline in UK fleets
obviously meant that training opportunities also declined [Government
Interview]
Most important here is the fact that, the state understands the decline in seafaring skills
to have been strongly linked to, and preceded by, the decline in tonnage. That declining
UK tonnage led to a fall in employment for UK seafarers and diminished demand for
UK officers. Furthermore, it reduced the cadet training capacity as the following quote
suggests:
Because ship-owners were going after cheaper crews they stopped

employing British officers and naturally they stopped training UK cadets,
[and] that is where the problem started from [Government Interview]
The government also understands that the prolonged lack of employment for British
officers and lack of cadet recruitment and training negatively impacted upon the
society’s perception of the career which might have led to a decline in the enthusiasm of
British people towards the seafaring occupation. According to a government source:
During these years of decline the momentum of our seafaring tradition was
interrupted such that now we have to try and re-cultivate awareness and
interest among British youth [Government Interview].
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According to these government officials the worst effect of the prolonged period of
decline in the fleet, employment and officer numbers has been a growing distance
between shipping and seafaring activities and people’s lives. One explained:
Now many people no longer have contact with shipping and the new
generation knows very little about seafaring careers [Government Interview].
The government ’s view on the impact of this decline in seafaring skills is well
documented in the main shipping policy documents like Charting a New Course and
came out clearly in my interviews with the policy officials. Evidence from these
documents show that the government’s position was that this decline not only affected
deep-sea shipping skills but, and perhaps more importantly, shore-side maritime skills.
Primarily concerned with the effects of a skills shortage to such an important sector, the
government saw boosting cadet recruitment and training as the best way to increase the
supply of qualified junior officers. These officers would, after some years of sea
experience, transfer essent ial skills to the shore-side maritime sector. One government
policy source explained:
It is important that we increase training activities; it is the only way we can

ensure a steady and reliable replenishment of such important skills
[Government Interview]
Another official added:
If we do not have a steady supply of maritime skills coming through from

the sea, you can imagine what could happen to London as a centre for
international shipping… It is very important that the pool of qualified
officers is maintained…. The government, as you know, is doing everything
possible to make sure of this [Government Interview]
The government’s emphasis on ‘shore-side maritime skills’, as opposed to ‘seafaring

skills’, in both the documents and interviews is significant and, perhaps, reveals its
central interpretation of the skills problem. From the wording of the various policy
documents and the interviews it seems that the government’s main interest in the British
pool of officers is only as a means of producing and transferring seafaring skills to the
shore. This might lead to one important but disturbing question: Is it possible, therefore,
that the government had long given up on the local pool of seafaring skills and was,
instead, only concerned with shore-side maritime skills? A government source had the
following to say:
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We will be lying to ourselves to expect that the UK can ever play a major
role in staffing the international fleet. That market is gone. However, we
cannot give up on the shore-side skills base; that is important else there will
be no Maritime London [Government Interview].
Should it be the case that the government’s main concern was not with seafaring skills,
but rather, shore-side maritime skills, then it might explain the lack of force behind the
strategy. However, there would still be one puzzle: if the government was not keen on
rebuilding the pool of seafarers for its own sake, why did they not find more effective,
shore-based, solutions instead of the more complicated route via seafaring, which the
companies seemed to oppose?
A possible answer to this puzzle is that the government was always aware that
rebuilding a huge pool of sea-going staff would be difficult because of the competition
from low-cost labour supply countries, although there was urgent need to increase the
supply of shore-side skills. Unfortunately developing shore-based training solutions
would be hard and could take a long time because it would involve a complete change
in the current system of producing skills for the industry. The only option was therefore
to convince shipping companies that training officers in order to replenish and sustain
shore-side maritime skills was ultimately to their own advantage because, although they
could get seafaring crews from low-wage countries, they could not rely on the same for
their operations ashore. This also comes out in one government interview where the
official remarked that “after all, it is these same companies who require the skills in
their shore-side management activities” [Government Interview].
While analysing the government’s interpretation of the problem and considering its
impact on the form of the response adopted, it is important to consider the fact that the
government was working with other stakeholders whose interpretations inevitably
impacted to some extent upon its perception. There was pressure from unions and from
corporate industry to ensure that the government’s strategy effectively represented their
different interests. In the next section I will examine the consultative process
underpinning the development of the strategy and consider the influence of the industry
and the unions on the outcome.
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5.4 Designing an Approach

In the process leading to the development of a comprehensive shipping policy which
would set out the government strategy for the recovery of the industry, the government
did not work in isolation. It engaged in a consultative process involving all the major
stake-holders including seafarers’ unions, and the corporate industry. In 1997 the
government formed the Shipping Working Group (SWG) consisting of representatives
from key stake-holders in the industry including trade unions, Maritime London3 , the
Chamber of Shipping, Ports and Harbours and various relevant government departments
(DETR, 1998). This group was charged with the responsibility of examining the
problems facing the industry. It came up with recommendations upon which the White
Paper, British Shipping: Charting a New Course is based. The main objectives detailed
in the policy were therefore drawn from the recommendations of the SWG report. These
are summed up as:
…to develop the UK's maritime skills, secure British seafaring employment,
enhance the UK's attractiveness to shipping enterprises, and gain safety and
environmental bene fits [Charting a New Course, p.1].
This consultative approach was necessary, according to the government, because the
decline in the industry touched on, and affected, all parties related to maritime business
(DETR, 1998). It was also a problem that had been le ft to grow so big that only a
combined effort of all interest groups could resolve it. The shipping policy document,
Charting a New Course, clearly emphasised the need for all stake-holders to continue
working together to stop the decline and reverse the trend in order to make the British
maritime sector strong again:
More than an action plan is required [to reverse the decline]. [The objectives
of Charting a New Course] will be attained - and the maritime economic
future of the nation secured - only over time and through a committed and
sustained partnership between the Government, the maritime trades unions,
the UK shipping industry, 'Maritime London', the ports and the other
maritime-related sectors [Charting a New Course, p.1].
3
Maritime London is the term used to refer to a collection of shore-side firms offering maritime services
in the city of London. These include Finance, Insurance, Legal, Brokers and Agency, Survey, ship
management and consultancy, firms.
- 113 -
It further described and stressed the need for ‘partnership and synergy’ as the only way
to achieve positive and lasting solutions to the decline:
The piecemeal measures taken to date have not succeeded in reversing the
present vicious circle of decline because they have not addressed the
complexity of the situation…..It is evident therefore, that success in creating
a 'virtuous circle' of growth rests greatly on the synergy generated by the
integrated policy proposals. This can be achieved only by a committed
partnership between all the various interests - the ship-owners, the maritime-
related industries, the maritime unions and government - to ensure full
implementation of the 'package' [Charting a New Course, p.21].
The government also maintained that in order to effectively address problems in such a
complex industry all interested parties needed to work together because “individual
interest-group strategies would only promote specific interests and would be ineffective
in the long term” [Government Interview]. It recognised that all maritime interests were
conjoined and had to be addressed as one. For example, the government identified the
fact that the burden of developing and maintaining a steady supply of maritime skills
rested with ship-owners and pointed out that it was a burden which these companies
would not want to continue to carry unless it was made worth their while (DETR, 1998).
For this reason all parties affected by the decline in skills needed to coordinate the
process of recovery:
…….maintenance of the UK maritime skills base required by the shore-

based sector of the economy depends on increasing the recruitment and
training of British seafarers - a burden which will continue to fall, in the
main, on UK shipping companies. Even with the aid of government grants,
these companies will have little incentive to make this investment unless
they consider it viable to employ such seafarers [Charting a New Course,
p.21].
Following the adoption of the policy the government constituted an independent

commission of enquiry into a UK Tonnage Tax which was chaired by Lord Alexander
of Weedon. This commission investigated and reported on the viability of a tonnage tax
as a possible strategy for the recovery of British shipping. In the same spirit of
‘partnership and synergy’ the commission was also made up of representatives from all
the major stake-holders in the industry. When it reported (Alexander Report 1999) the
commission recommended the adoption of a UK tonnage tax as the main strategy for
the recovery of shipping. The aim was to make the UK a more friendly investment and
- 114 -
business environment for ship-owners and operators in order to encourage growth in the
industry, both afloat and ashore. The report explains:
It is accepted by all those I have consulted, including Governme nt

departments, the industry and trades unions that without a user-friendly and
virtually tax-exempt environment there is no real prospect of achieving the
aim of Government policy to revive the industry. A tonnage-based form of
corporation tax is the means proposed to achieve this fiscal environment.
Evaluation of it was at the core of my terms of reference [Alexander Report,
p.3]
After all the consultations and deliberations the UK tonnage tax was agreed upon as the
main government strategy to spearhead the recovery of the UK’s shipping industry.
Because of the diversity of perspective and interests comprising the consultative process
described above, that is, the union perspective, the corporate perspective and that of the
government, one would reasonably expect a conflict of interest since each group would
be pursuing its own agenda. In the following section I examine and discuss this ‘clash’
and explain how it might have influenced the process and the final result. It is essential
to examine how the government handled the diverse agenda that must have been
presented by the different parties. This might help shed some light on the puzzle as to
why the strategies are inconsistent with the state’s diagnosis of the problem.
5.5 Conflicting Interests

I have already indicated that the government had to work through a complex of
conflicting stakeholder interests in the process of arriving at a comprehensive response
strategy. The three most important stake-holders, in this case, were the corporate
shipping indus try, represented by the Chamber of Shipping and the seafarers and
shipping professionals unions, represented by (NUMAST) - the National Union of
Maritime Aviation and Shipping Transport (now called Nautilus-UK), the National
Union of Rail, Maritime and Transport Workers (RMT) and the Transport and General
Workers Union (T&G) and the Government.
The unions pushed for the training, employment and general welfare of British seafarers
and their recommendations to the SWG included encouraging all UK-based ship-
owners and operators to train British cadets and make training berths available on all
suitable vessels. With regard to employment, the unions’ recommendations centred on
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the need to ensure, through state legislation, that more seafaring jobs were created and
protected on-board all British flagged ships (DETR, 1998).
The corporate industry, on the other hand, proposed that the government help reduce
their cost burden with regard to training and employing British seafarers (DETR, 1998).
Their argument was that British officers were much more expensive than those from
low-cost developing countries. Hence, if the government subsidized the cost-difference,
they would be willing to employ more British officers. In addition, they called for
National Insurance contribution alleviation and the expansion of the Crew Relief Cost
Scheme 4 for those companies which met the minimum training commitment as ways of
encouraging operators to employ British junior officers (See DETR, 1998).
Seemingly, the companies’ main interest was to push for an improved business
environment for their operations because, according to one industry manager, “there is
sufficient supply of seafarers and we do not really rely on the British source” [Shipping
Company, Interview 10]. Their major concern was that the cost of operating ships under
the UK register was too great, such that UK ship-owners and operators were finding it
difficult to compete with their counterparts from low-cost flags. They recommended the
introduction of a more favourable tax arrangement for resident companies and
enhancement to the rate of depreciation allowance to make capital investment more
profitable (DETR, 1998).
While there certainly was common ground in the need to see UK shipping come out of
the decline and grow, the two main stake-holders were pushing two separate and
conflicting positions. The unions’ called for more involvement by the industry, both at
sea and ashore, in funding more cadet training. The same goes for their call for the
provision of employment opportunities for British seafarers on UK-flagged ships. These
proposals went against the cost-cutting agenda of the corporate industry.
4
The Crew Relief Costs Scheme provides assistance in meeting the cost of flying British crew to and from distant
ports. The scheme aims to encourage ship owners and managers to employ seafarers resident in the British Isles.
Section 76 of the Merchant Shipping Act 1995 allows financial assistance to companies for travel costs for crew
members who are U.K. resident. The government contributes £1.4m to this scheme annually.
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It was, therefore, largely a ‘battle ’ of interests between shipping capital and shipping
labour in which the main difficulty for the state was in arriving at strategy that would
effectively serve both sets of interests. The dilemma was how to convince ship-owners
to train more British cadets and employ more British junior officers when it was clearly
not in their short-term commercial interest to do so. By looking at the design of the
tonnage tax it seems as if the government’s fear of ‘tonnage flight’ meant that corporate
interests prevailed. This is because the tonnage tax delivers more ‘tangible’ benefit to
ship-owners than to seafarers. It gives ship-owners enormous tax reductions but requires
no UK officer employment commitment on their part. The Minimum Training
Obligation contained in the Tonnage Tax only requires ship-owners to recruit cadets
and contribute 50% of the total expenses of their training but, as the unions argue, “if
the companies do not want to employ the junior officers they undertake to train, the
training obligation is meaningless in the long-run” [Union Interview].
What this implies is that, whereas the government finally had a clear strategy in place
for increasing UK tonnage (offering tax reductions to ship-owners and improving the
general business environment), they did not have any for seafaring skills. The most
persuasive explanation for this is that the government was most strongly influenced by a
fear of ‘capital flight’ and this caused it to abandon any efforts to make a stronger case
for seafarer employment. Like the government, the unions were also influenced by the
same fear and did not push convincingly for their case fearing that companies would
decide to flag out as a result of pressure to employ British junior officers, resulting in a
further loss of employment for British officers. The impact of this upon unions would
be a further decline in terms of membership and, ultimately bargaining capacity. The
data therefore seem to strongly suggest that the design and adoption of the
government’s response was heavily influenced by a fear of capital flight such that the
overall response favoured shipping capital interests more than the interests of seafaring
labour.
5.6 The Strategy

The tonnage tax was introduced into UK law by the Finance Act of 2000 (HMSO,
2000). It is mainly a tax incentive via which the government sought to reduce shipping
companies’ tax burden by offering a friendlier and predictable tax system based on the
total tonnage operated rather than the total profits of a company. A training element was
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included to commit the companies to train UK cadets in order to increase the supply of
British junior officers (Lord Alexander, 1999; Selkou and Roe, 2002).
Prior to this, however, and with regard to the need to increase the number of officers,
the government, following the proposals of the Shipping Working Group on how to
increase funding for cadet training, put in place a scheme called SMarT – Support for
Maritime Training. The aim was to channel government funding for the recruitment and
training of cadets in the UK. This scheme was introduced in April of 1998. The main
objective was to increase the number of officer trainees, which had dwindled over
previous years to a mere trickle, through increased financial support for cadet training
from the government.
The SMarT scheme is divided into four categories:
(1) SMarT 1 funds trainees following a programme of training leading to a

Maritime and Coast Guard Agency (MCA) first certificate of competency as a
deck, engineering or dual officer;
(2) SMarT 2 funds junior officers following a programme of shore-based

training leading to a second certificate of competency as a deck, engineering or
dual officer;
(3) SMarT 3 funds ratings following programmes of shore-based training to

develop their skills and;
(4) SMarT 4 funds officers already holding certificates of competency following

shore-based training to update their skills in order to meet the new requirements
of the revised Standardisation of Training, Certification and Watchkeeping
(STCW) 95.
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This fourth category was necessary because following the revision of the STCW 785 in
1995 there was a requirement to upgrade seafarers’ training to the standards and
requirements of the new STCW 95. The objective of this new version was to provide a
standard for training officers worldwide so as to ensure a uniform quality of officers due
to the growing diversity of nationalities joining the global seafaring labour market. All
those officers who were working at sea before 1st August 1998 and had not completed
the requirements for the STCW 78 certificate would be required to take the new STCW
95 certificate after extra training.
A fifth category was added to the scheme recently (in 2004) which targets new entrants
and other supernumerary ratings following apprenticeship and other courses of more
than fifty-two weeks in length. This scheme is a long term government funding
commitment. It will increase the industry financial support from £6.4 million in 1999 to
£23.4 million in 2007 (Lord Alexander, 1999:18).
Although this scheme was introduced much earlier than the main policy strategy –
tonnage tax – it has come to play an important role as a supporting mechanism. It is
now the main vehicle for channelling the government’s part of the cadet training
funding under a joint training commitment established as part of the tonnage tax
whereby shipping companies pay half of the total cost of training cadets while the
government pays the other half. The primary objective of the scheme is to enable as
many young British people as possible to train as officers by providing funding. The full
course costs around £40,000 per cadet for a three to four year programme. Providing the
funding in this way therefore ensures that all those school leavers who would like to
train as officers are not denied the chance and so that the government maximises the
opportunity to get as many young people to enter the programme as possible by
eliminating financial obstacle s.
5
The International Convention on Standards of Training, Certification and Watchkeeping for Seafarers
(STCW) is an International Maritime Organization (IMO) which sets minimum qualification standards
for masters, officers and watch personnel on seagoing merchant ships. The Convention was the first to
establish basic requirements on training, certification and watchkeeping for seafarers on an international
level. Previously the standards were established by individual governments, usually without reference to
practices in other countries. It was adopted in 1978, entered into force in 1984 and was significantly
amended in 1995.
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With regard to boosting growth in the pool of British seafarers an important training
element was included in the tonnage tax. This training element takes the form of a
requirement that all participating companies recruit and train one UK cadet per every
fifteen officer slots entered in the ships ‘manning’ certificate:
The formal training offer made by the industry as a precondition of

eligibility to the tonnage tax is a "minimum training obligation", "to recruit
each year one UK officer trainee for every 15 existing officer posts,
regardless of whether the existing post was currently filled by a UK officer
or one from another country." After three years this would mean in broad
terms that there would be one officer cadet under training for every five
officer posts [Alexander Report, p.17].
A third and more recent initiative which, like the SMarT scheme, is comple mentary to
the tonnage tax is ‘Sea Vision.’ It is a coordinated national campaign led by the British
Chamber of Shipping to raise awareness of the sea and the maritime sector. Its two main
objectives are to raise awareness and increase understanding of the sea and the wider
maritime sector, and to attract yo ung people to participate in maritime activities and
careers. The government works in partnership with the Chamber of Shipping, the
Merchant Navy Training Board (MNTB) and other maritime bodies and institutions to
organise promotional events and activities in schools and youth centres around the
country. The ultimate aim is to correct the negative social perception of the profession
and rejuvenate the shipping and seafaring tradition of the British people in order to
create and maintain a viable source of British officers to sustain the maritime skills base:
Sea-vision UK campaign is driven by industry, from the chamber of

shipping as you already know. Funded by industry to a large part and it is
all about raising awareness, along side, the merchant navy training board
also do a lot work to promote and encourage awareness of careers at sea, its
a big job [Government Interview].
A fourth and closely related initiative in which the state has played a greater role is the
development of a new foundation degree. This is also a supporting initiative intended to
promote and enhance the image of the seafaring career. In order to encourage more
young British people of higher academic quality to join seafaring the government is
experimenting with this new training path for cadets with an elevated academic status
which allows those who are interested in degree qualifications to achieve them in
seafaring.
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All these different initiatives make up the government’s comprehensive recovery

strategy but, as I said earlier, the main element is the establishment of the Tonnage Tax
and the Minimum Training Obligation contained within it. In this thesis I therefore refer
to them as ‘the tonnage tax package of initiatives’.
5.7 Assessment
As already discussed in chapter three, the objectives of the government’s strategy for
shipping were threefold: first, to boost growth in the UK fleet by creating a friendly and
attractive business atmosphere for ship-owners; second, to increase the supply of
seafaring skills through increased cadet recruitment and training; finally, to boost
growth in the shore-side maritime cluster of industries so as to maintain the strength and
influence of the city of London as the international centre for maritime business. One
important characteristic of this strategy is that it is almost entirely supply oriented in the
sense that it is designed to address supply rather than demand issues.
There is too much emphasis on state-prescribed supply initiatives which do not take
demand into serious consideration. This is an important characteristic because it is
inconsistent with the government’s diagnosis of the actual problem which highlighted
predominantly demand related issues. Furthermore, a recent review of skills in the UK
shows that an effective approach to skills development is one which is demand- led
rather than supply oriented (Leitch Review of Skills, 2006). Data from World Fleet
Statistics, presented in the chart below, indicate that UK registered tonnage has
increased significantly since the introductio n of the tonnage tax in 2000. From
5,531,986 GT in 2000, the total tonnage of the UK fleet grew to 12,149,988 GT in 2006
which represents a big improvement within five years.
Fig. 13: UK Registered Tonnage 2000 – 2006
UK Registered Tonnage 2000 - 2006

Million Gross Tonnage
15000000
10000000
Tonnage
5000000
0
2000 2001 2002 2003 2004 2005 2006
Year
Source: Lloyd’s Register – Fairplay: World Fleet Statistics 2006

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Although there has been some improvement on the side of cadet training, the inc rease is
not great. Government statistics indicate a rise in the number of cadets joining training
between 1999 and 2006. There has been a 30% growth in cadet intake. Though this
growth is significant, measured against the target set of 1200 cadets a year, it is not
enough to sustain the UK’s seafaring skills needs because the decline in the skills base
was very great.
Cadet in-take and training declined drastically in the period between mid 1970s and late
1980s. From an annual intake of 2,315 in 1975 it fell to 1,274 in 1980 and down to 162
in 1987. From then it recovered slightly to between 400 and 500 in 1999 (House of
Commons, 1993; Employment Link, 2004). Since the tonnage tax was introduced, with
its training commitment, there has been a significant improvement on these figures to
around 630 in 2006. The number of cadets actually in training in each year, which
would suggest the annual output levels for junior officers, has, however, not improved
much. From 981 cadets in 2000 the number has only slightly increased to 1090 in 2006.
Figure 14 shows the cadet intake and training trend since the tonnage tax (see figure
below).
Fig. 14: Cadet Intake and Training Levels 1999 - 2006
Cadet Intake and Training Levels 1999 - 2006
1500
No. of Cadets
1000
500
0
1999
2000
2001
2002
2003
2004
2005
2006
Year
Cadet Intake Cadets in Training
Source: United Kingdom Seafarers Analysis 2006
This small improvement in levels of cadet output, despite the significant increase in
intake levels, raises questions about the success of the strategy. The officers’ union,
Nautilus UK says that:
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Sadly, since Charting a New Course was published in December 1998 there
has been growing evidence that the measures put in place to develop the
industry’s workforce have been inadequate [Employment Link, 2004, p.1]
According to the 1996 study, it was determined that the UK needed a yearly cadet in-
take of 1200 in order to maintain the minimum maritime skills base (Gardner and Pettit,
1996). With the introduction of the tonnage tax it was hoped that this target would be
met within the first five years but unfortunately this has not happened although it is
important to acknowledge that there has been a 30% increase in cadet intake levels
between 1999 and 2006. The main problem seems to be that this increase has not
translated into an increase in the number of qualified junior officers graduating from the
training programme. Consequently the total number of qualified British officers has not
changed significantly since 2000 and, evidence from the industry shows that the little
increase is being quickly absorbed into a market that is already experiencing a shortage.
Fig. 15: Total Number of UK Officers 2000 - 2006
Total Number of UK Officers 2000 - 2006

Number of Officers
14,500
14,000
13,500
13,000
12,500
12,000
2000
2001
2002
2003
2004
2005
2006
Year
Source: United Kingdom Seafarers Analysis 2006
The overall assessment is that whereas the strategy has succeeded in the objective of
attracting ship-owners and increasing UK registered tonnage, it has failed to increase
the number of junior officers. The surprising outcome of this analysis is, however, that
the Minimum Training Obligation and all the associated initiatives have led to a
significant increase in annual cadet intake levels. The important question therefore is:
why has this increase not translated into an increase in the annual output of qualified
junior officers? The answer lies with corporate officer recruitment and employment
policies and practices, the subject of the next chapter.
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CHAPTER SIX
The Company Approach
Introduction
Chapter five described the complex context of conflicting stakeholder interests from
which the government had to work out a common response strategy for the declining
UK shipping industry. However, the assessment at the end of the chapter concluded that
the strategy adopted has not been successful in relation its objective of increasing the
number of British junior officers. To begin to explore why this is the case, I consider the
position of the companies in this process. After all, the critical partner in the process of
developing and adopting the tonnage tax package of measures is the shipping
companies. They were targeted as the main beneficiaries of the tax package as well as
the implementers of a largely supply based approach.
The tonnage tax is primarily a form of corporation tax, specially designed for shipping
companies, whereby their income is taxed on the basis of the total tonnage of their
registered fleet rather than their total annual profits. Via this tax regime and its
associated “Minimum Training Obligation”, the UK government has sought to boost
growth in the national fleet and encourage the training of British officers. They have, in
addition, introduced extra indirect measures to support seafarers’ employment but, as
we have seen previously, nothing has been done to directly address the problem of lack
of employment opportunities for UK seafarers on UK ships.
The tonnage tax package of initiatives has so far failed to effectively tackle the crisis in
shipping labour in the UK despite the increase in company involvement in cadet
recruitment and training. The main question here is why this has been the case? In this
chapter I will analyse the interview data collected on shipping companies’ post-tonnage-
tax recruitment and employment strategies, for merchant navy officers, in order to
consider why the government strategy has not been as successful as initially expected.
The overall objective of the government in introducing the tonnage tax was to
encourage growth in the UK registered fleet and the shore-side cluster of maritime
related industries. Additionally the government sought to stimulate the recruitment and
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training of British cadets. What the tonnage tax did not do was specifically address the
employment of qualified British junior officers. A number of important questions are
addressed in this chapter: How have company recruitment policies and practices been
affected by the tonnage tax? What drives and determines the direction of company
recruitment policies? And, in what ways have these policies rendered the tonnage tax
strategy ineffective with respect to skills development.
The chapter is organised into four sections. Section one introduces a possible
explanation for the failure of the tonnage tax by examining the prevailing attitude of
UK-based shipping companies towards its design and focus. Section two presents a
discussion of the recruitment policies and strategies of UK based companies and their
determining factors. Section three is a discussion of the impact of these company
policies on the performance of the tonnage tax and will examine how companies have
approached and executed their training obligation by analysing company managers’
accounts of their commitment to cadet recruitment and training. Finally, section four
concludes the chapter with an overall assessment of the implicatio ns of company
recruitment and employment policies on training levels in the UK and examines the
reasons why companies use arguments about quality and reliability to justify and
legitimise the arguments about cost.
6.1 The Industry View of the Tonnage Tax

As already stated, the tonnage tax was designed to achieve three main objectives: (1) To
revive the diminished UK registered fleet; (2) to expand the cluster of maritime related
firms and industries and; (3) to increase the number of qualified British junior officers
and boost the maritime skills base. Chapter three established that whereas much has
been accomplished, through the strategy, with regard to the first two objectives, the last
objective, that is, increasing the number of qualified British officers has proved difficult
to achieve. According to the Department of Transport (DfT) data a significant number
of ship-owners have brought their vessels into the tonnage tax regime, many of which
have since been transferred to the UK register. This is reflected in the increase in UK
registered tonnage from 5.5 to 12 million GT between 2000 and 2006 (Lloyd’s Register
– Fairplay: World Fleet Statistics, 2006).
In a highly globalised industry such as shipping where the possibility of capital flight is
probably greater than anywhere else, and labour, though locally based, is organised and
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accessed globally, the influence of companies on related state economic strategies is

likely to be significant. The success or otherwise of a strategy like the tonnage tax
Minimum Training Obligation, which aims to develop and sustain an individual,
national labour segment, therefore, largely depends on the attitude and response of the
companies based within the state.
According to shipping company managers the tonnage tax has several shortcomings.
Their concern is mostly with the cost of operations and the general business atmosphere
in the country. Many presented the view that the government could have done, and
should do, more for the industry in order to encourage more capital investment. For
example, they argue that the government could “re- introduce 100 percent depreciation
allowance for ships and take measures to bring back ship-building” [Shipping Company,
Interview 11]. Many, however, agreed that the tax savings offered by the tonnage tax
arrangement were substantial, which explains why many of them have opted to bring
their ships and a substantial amount of their ship management operations (back) to the
UK. A government official explained that “many owners [were] already seeing the
benefits of the tonnage tax and bringing their ships into the UK register” [Government
Interview]. According to the official, “the UK fleet [has] responded with good growth in
the past few years”.
The issue of increasing training and employment for British junior officers is however
more complicated and industry managers had different things to say about it. The
strategy is clearly not working in this area and there seems to be divided opinion as to
whether the tonnage tax is adequate and well balanced enough to achieve all its intended
objectives. Although many of the managers did not seem bothered about this particular
issue, there were a few who supported the view that the number of officers in the UK
should be encouraged and aided to grow but they argued that the government had not
done enough in this direction and suggested that, from the way the strategy was
designed, it seemed that increasing the pool of seafarers was not top of the
government’s list of priorities. Some argued that the strategy was primarily aimed at
fleet recovery and encouraging capital investment in the industry with cadet training and
employment being just a secondary objective. One such manager said:
…if you look at the tonnage tax critically you will realise that it was never
really meant to focus on cadet training and employment from the start, it
was only hoped that it would result in some increased training. The tonnage
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tax was always a financial instrument to encourage ship-owners to operate

their vessels under the UK regime [Shipping Company, Interview 17]
Their interpretation of the strategy was that, it was influenced by the fear of tonnage
flight, whereby national governments are in constant fear of introducing measures
which might upset ship-owners and drive them out of the UK register. Confirmation for
the view that tonnage flight was a major factor shaping the strategy was given by union
and government officials. One union official, for example, observed that “the
government is just scared that the owners will up and go if forced to employ more
British junior officers” [Union Interview]. A push for employment is one of the things
that might cause capital to move elsewhere (See Sorensen, 2004; Fourcade-Gourinchas
and Babb, 2002; Hall, 2003). In an interview with one of the government policy
officials he explained that “the government is aware of the dangers of pushing
companies too hard” but added that “this does not mean that we are doing nothing, we
are in negotiations with companies to make sure that a lasting solution is found”
[Government Interview].
The greatest criticism of the government strategy, especially from those industry
managers who support efforts to increase the pool of officers, is that it contains no
effective blueprint for recovering the pool of seafarers. In response to a question on this
a government official said:
When [the tonnage tax] was being developed all parties hoped that the
training commitment in itself would lead to employment. All parties
believed that once people had trained seafarers they would employ them and
that this would then automatically lead to an increase in the numbers of
junior officers and more enthusiasm [Government Interview].
What this suggests is that there was no clear strategy for increasing employment for
British junior officers since it was only “hoped” that employment would
“automatically” follow. There is wide consensus though that the government, through
the tonnage tax, addressed only the supply side of an equation which could not be
effectively solved without tackling the demand side. Even the employers (the ship-
owners and operators) acknowledge the fact that without boosting employment
opportunities for British junior officers, the seafaring career will continue to be
perceived as a career without prospects for the British. This would mean that attracting
and retaining many young people of suitable quality and disposition would be difficult.
One training manager observed that:
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The problem with the tonnage tax is that none of its financial incentives
really translate into any benefit for the seafarer. There is little
encouragement directly to the seafarer and, to make it worse, it does not
really focus on creating jobs for the cadets that go through the system. It has
done little to address the problem of diminishing job opportunities since it
does not compel the owners to employ so the owners train British cadets but
they are not willing to give them jobs because they are too expensive,
[Shipping Company, Interview 3].
It seems, therefore, that it was not enough for the government to just ‘hope’ that
employment would follow. According to many people in the industry, including, some
company managers, training managers and union officials, it was clear from the
beginning that creating employment was key to achieving the overall objective hence
the government should have pushed strongly for employment as a key component in the
strategy.
So, seemingly, many industry managers agree on the necessity of subsidising

employment opportunities by the state as a way of stimulating growth in the British
pool of qualified junior officers. Many of them however maintain that the circumstances
which led employers to seek low-wage foreign labour have not changed. They insist
that the cost of operating ships is still very high and that British junior officers are still
much more expensive as compared to their counterparts from Eastern Europe, Asia and
elsewhere in the developing world. Furthermore, the British source, in the opinion of
many employers, is not reliable as most officers tend to retire early from sea service.
Many therefore argued that, whereas they can not agree to any formal employment
commitment, as proposed by the unions (see Employment Link, 2004), appropriate
government incentives, especially those that could mitigate cost, might encourage
British ship-owners to employ more British junior officers. One such manager
explained:
Unless the government is willing to subsidise shipping companies I don’t

think any of us are willing to commit to employing any more British junior
officers than we necessarily can. It is becoming even more expensive to
employ the British as cost increases and you are not going to convince a
ship-owner, keen on surviving cut-throat competition to employ a British
junior officer when he can get good Polish officers at a much less price
With regard to the tonnage tax as an incentive for registering and operating ships from
the UK, most of the companies seem satisfied and, as stated earlier, many of them have
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brought their vessels into the tonnage tax regime and even transferred them to the UK
register. One manager observed:
The tax benefits are substantial, compared to the normal corporation tax,
this is a great relief from the heavy cost burden that has crippled British
owners in the past many years [Shipping Company, Interview 12]
Even the cost of training cadets does not seem to bother the companies greatly though
some think that the state should consider subsidising the total cadet training cost as is
the case in other EU countries like the Netherlands. One HR Manager explained that the
amount they have to spend on the training scheme is reasonable though more state
subsidy would be even better:
The 50/50 training cost-sharing arrangement is reasonable. It certainly

makes it easier for companies but maybe the government should be thinking
in terms of 100% training subsidy like in the case of the Netherlands in
order to encourage even more training activity [Shipping Company,
Interview 12].
So, the tax reduction is ‘substantial’ and the training cost arrangement is ‘reasonable’
but, the data clearly suggest that the overall arrangement does not necessarily encourage
companies to consider employing more British junior officers. Very few of the
companies interviewed actually train with the view of employing. This suggests that
many companies view the training obligation simply as a condition to be met in order to
participate and partake in the benefits of the tonnage tax regime. With relation to the
intention to employ cadets, one Operations Manager explained:
We don’t guarantee employment to any of our cadets simply because we

can’t. We tell them we will do our best to get them employment…We
cannot guarantee jobs at the beginning of a three year training programme
because you never know what happens three years down the line maybe
circumstances may change, fleet decline or even expansion [Shipping
A Human Resource Manager of another company explained:
We train alright but that does not mean very muc h… I don’t want you to get
me wrong, I have nothing against training British officers but who is going
to employ them? If we train then we should employ but we can’t…it is just
too expensive… I don’t want to give young people false hopes… It is a sad
situation, I agree, but that is the way of open markets…we must live with it
[Shipping Company, Interview 13]
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Many of these company managers stated that, even in better circumstances, they were
unwilling to employ British junior officers because of the availability of cheaper yet
equally suitable alternatives overseas:
There is very little reason for many companies to revert back to employing
British officers. The fact is that officers from these other countries are much
cheaper but equally well qualified. So the government would have to dig
deeper for a way to convince us that we need them [Shipping Company,
Interview 11].
The company managers participating in this study clearly indicated that it did not really
bother them whether or not the decline in the pool of qualified British officers continued.
What mattered to most of them was the cost of operating ships and, as long as they were
able to get enough officers at the right price, they were happy to continue employing
foreigners, as the following quote for a company manager suggests:
… it does not matter who operates the ships as long as ships are running
efficiently and cost effectively. Does it bother me that the pool of British
officers has diminished? I’d say, it makes no difference [Shipping Company,
Interview 17].
This discussion clearly reveals the prevailing company attitude towards the tonnage tax
and the Minimum Training Obligation. This attitude certainly influences the shape of
the companies’ officer recruitment and employment policies. In the next section I will
examine factors which drive their recruitment policies.
6.2 Understanding Company Recruitment Strategies

One of the most important determinants of the success, or otherwise, of state strategy in
relation to employment and the recovery of local labour markets is industry
employment policies. This is especially so in shipping where employers have a wide
range of sources of labour available to them from around the world at varying prices. It
is in turn influenced by the corporate profit motive which forms the main driving force
in company operations. In order to maximise profit, companies look for ways to
minimise their operating costs. As has been pointed out in earlier chapters of this thesis,
ship crewing costs are substantial but, more importantly, of all the major cost items
involved in the operation of ships, labour is arguably the most variable in a context
where many other costs are not under the control of operators. Ship-owners have,
therefore, over the years, designed crewing policies which enable them to increase their
competitive advantage in terms of cost effectiveness. These policies direct their
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recruitment strategies and have, over the years, resulted in increasing the prevalence of
seafarers from low-wage developing countries.
The international wage structure for seafarers is highly complex and a wide range of
nationalities participate in the seafarers’ global labour market. All these nationalities
come from countries with different standards and varying cost of living which impact
upon wage expectations and produce considerable variation in wage scales across the
globe. Certain countries, like the UK, apply national minimum wage limits to seafarers
but these are generally restricted to those working on-board ships in domestic trades and,
therefore, leave the wages of the majority of seafarers serving aboard international
vessels to be fixed freely by ship-owners and operators. Consequently, operators,
especially those of FoC ships, have a wide discretion on wage scales, in spite of efforts
by the International Transport Workers Federation (ITF) to establish minimum rates of
pay for FoC crews. Consequently, it is common practice for seafarers of a different
nationality to be found working on the same ship, performing the same duties as the rest,
but receiving a different pay rate.
According to my company interviewees, the challenges for ship-owners in recent years

go beyond cost. Apparently increasing global competition for the provision of shipping
services coupled with growing consumer and societal awareness has forced some ship-
owners and operators to re-examine their strategies and redesign their employment
policies (Sampson, 2004; Bloor et al, 2006). In doing so, they have attempted to arrive
at a balance between remaining cost competitive and satisfying consumer and societal
demands for a clean, safe, and environmentally friendly shipping service. As a
consequence, company recruitment and employment strategies, worldwide, have
become more complex, taking not only cost but also ‘quality’ into account when
sourcing labour. In the following subsections I will examine and discuss some of the
major factors which influence the officer employment policies of UK-based shipping
companies.
6.2.1 Cost
From the accounts of many of the industry managers interviewed for the study, it seems
that increasing competition and rising ship operation costs in the 1970s and 1980s
forced ship-owners to find cheaper means of operating their vessels in order to remain
competitive and profitable. Chapter two and three explored the developments in the
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industry, during this period, which led to the rapid growth of Open Registers and their
extensive transformative impact on world shipping. More than anything else, it is this
development that offered an ‘escape route’ from ‘crippling’ costs for many ship-owners
and operators. By ‘flagging out’ vessels to less stringent and low-cost flag-regimes,
ship-owners were able to benefit from, not only lower corporation tax rates but also, a
reduction in crewing costs and generally lower overhead costs (Metaxas, 1985; OECD,
1996; Marlow et al, 1997; Marlow, 2002). Some of the major ship operation cost items
for shipping firms include stores, repairs and maintenance, insurance, administration
and crewing, as shown in Figure 16 below which tabulates the operating cost of three
different ship types. It shows that crewing costs make up the largest percentage of the
total operating costs for all the ship-types shown, that is, 52%, 63.1% and 50.3% for the
container ship, the bulk carrier and the multipurpose vessel respectively.
Fig. 16: Annual Operating Cost Figures for three Different Ship-types
Vessel Name Container Ship Bulk Carrier Multi Carrier
Light Weight Tonnage 5,600 11,483 13,700
Year Ended 31-12-06 31-12-06 31-12-06
Currency USD USD USD
Operating days in 2006 365 365 365
Crew Wages 601,009 1,272,805 971,382
Stores 184,996 150,593 270,660
Repairs and Maintenance 217,952 355,145 476,436
Insurance 167,147 249,647 336,843
Administration 175,903 219,876 191,627
Total 1,347,007 2,248,066 2,246,948
Note: Container ships are cellular vessels which are built to carry only containers. Bulk carriers are built with large
holds for the carriage of large quantities of dry homogeneous cargoes like grain and coal. Multipurpose vessels are
those which carry all types of cargoes in small packages. These are labour intensive and have been largely replaced by
purpose-built vessels like container ships. Container ships and bulk carriers do not normally require large crews. A
container ship of the size given here will carry a crew of around 16 while the bulk carrier will have around 22 and the
multipurpose one will have 30.
Source: One UK-based shipping company participating in the study.

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Most of the cost items shown in the table are generally considered ‘more fixed’ or costs
which operators have little control over. For example a ship must incur most of the
administration expenses shown in the table as well as repairs and maintenance whether
or not it is active or laid-up. The ship’s hull must also be insured at all times and the
stores expenses are largely fixed. Crewing costs are, however, variable. It is important
to note, however, that although some of these cost items are considered fixed, ship-
owners can still find ways of manipulating them by, for example, varying sources of
various commodities and services. Room for manoeuvre in the ‘more fixed’ cost items
is however not as big as in crewing whereby by changing the nationality of the crews a
ship owner can significantly vary most of the crewing costs, both wage and non-wage.
One of the reasons for the lower wages bill for ‘container ship B’, for example, is the
nationality composition of the officer crew. The other ship-types have a percentage of
officers from high- wage countries like the UK, Canada and Ireland which increases the
overall wage bill. Other factors to consider in determining the level of the wage bill
include the size of the ship and the type of ship.
A ship owner may also significantly reduce the amount of corporation tax and
registration fees by shifting vessels to a low-cost Open Register thus cutting down on
administration expenses. At the same time the owner will avoid the costly adherence to
international conventions on safety and environment protectio n which many of these
flags do not strictly enforce. Under stricter flags there is far less room for such
manipulation and operating costs are, therefore, much higher. Since crew wages
comprise a significant part of the total cost of ship operation, as the table clearly shows,
the chance to recruit cheaper crews is always attractive to operators. It is for this reason
that, over the years ship-owners have increasingly flagged out of strict flag regimes and
successfully taken advantage of labour from low-wage labour supply countries
especially in Asia and Eastern Europe. With the end of the cold-war and the collapse of
the Soviet Union since the late 1980s, Eastern Europe has become a major source of
seafarers due to the long shipping and seafaring tradition that existed in some of the ex-
Soviet countries (Wu and Veiga, 2004). Furthermore, the collapse of the Russian
shipping industry, and that of other former soviet countries, left behind a large
unemployed but well qualified and experienced pool of seafarers in the region which
subsequently became available to Western European ship-owners at very low prices.
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The most popular sources of officers for the companies I interviewed were India,
Philippines, Poland, Croatia, Ukraine and Russia, and the main determining factor in
sourcing seafarers from these countries was given as cost, as the following extract from
an interview with the manager of one company shows:
All companies are struggling to survive crippling costs and competition and
will take the slightest opportunity to break even. Labour is one of the
biggest operating costs facing shipping companies but it is also the most
variable, hence the opportunity to employ cheap crews…. is always
welcome [Shipping Company, Interview 15].
Many operators, therefore, capitalise on the variability of the crewing cost item to
reduce their overall ship operation costs. The following interview extract illustrates the
point about varying the prices of seafarers by changing sources:
….the cost of other nationalities is much cheaper so the owners are looking
at the cost of putting people on board their ships and if we find a nationality
that we are quite happy with like Croatian or Polish then we go for
them.....we are turning more and more to Eastern Europe and Asia for
officers in recent years [Shipping Company, Interview 6].
British officers are generally considered to be relatively expensive to employ by all

shipping companies, including those that do employ them. Many company managers
suggested that they could not afford to employ them and even those who could
explained that they had little compelling reason to continue doing so because they were
able to source crews much more cheaply from elsewhere. Many companies are therefore
not so much unable as unwilling to employ British officers because the ultimate
objective is to maximise their profits by taking every chance to reduce operating costs,
as the following extract demonstrates:
British officers are too costly and companies are not willing to take them on
considering that there are cheaper sources out there of people who can do
the job as well and are properly qualified. As I have indicated, shipping is a
very competitive industry and in order to remain profitable we are having to
be very careful with cost and that means reducing cost without affecting
quality and compromising safety. So we are going for foreign seafarers but
are being careful to get the best and as long as they are available there is no
reason why we would want to continue using the British officers who are
way too expensive [Shipping Company, Interview 15].
There is emphasis here on the centrality of the cost element as a driving force in
company recruitment policies. With time, seemingly cheaper foreign officers could be
expected to replace all British officers on ships operated by UK domiciled companies
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unless the government finds a way of ensuring their continued survival. This
replacement is likely to include the senior positions of master and chief engineer which
have, hitherto, been more or less reserved for British nationals on many UK registered
vessels. One company manager explained:
….they [the British] are over twice the cost of a Russian or a Ukrainian or a
Filipino and we are talking ITF wage rates so there is no undercutting. We
did have, up to two years ago, a number of British masters and chief
engineers but time has got hard in the multi-purpose sector. …we had to
replace them [Shipping Company, Interview 13].
A further disadvantage for the British junior officers is that, whereas many employers
consider them of good quality and would readily employ them if they were less costly,
the quality of the cheaper alternatives from developing countries has improved over the
years. It is now the case that many companies, such as the one represented by the quote
below, see no particular advantages in employing British junior officers over other
nationalities and therefore no reason to incur that extra expense. This could explain the
reports that the majority of officers below the rank of master and chief engineer are
currently from developing countries (BIMCO/ISF, 2005), and it certainly reinforces the
view that foreign officers are replacing those from industrialised countries. The
following quote from yet another industry Human Resource Manager reinforces this
widely held industry view:
Why will an employer go for a British officer, pay him an x amount of

dollars when you can go to the Philippines, get a perfectly good, well
qualified, officer for half the price, it does not make economic sense
A further problem in employing UK officers was identified by many managers as one of

supply and sustainable ‘manpower’ reserves. The quote below is illustrative of this
concern:
The British source of officers is not reliable. Most of our guys no longer
want to stay at sea for long and we want to avoid juggling personnel too
much; not good for business and it is costly as well. The Polish officers that
we acquired with the vessels have been with us till now but since then we
have lost many British officers who are too eager to leave for shore-side
positions. So we look at this as well [Shipping Company, Interview 13].
The perception of UK seafarer employers therefore seems to be that the British pool of
officers is both expensive and unreliable and no longer any better qualified than officers
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available elsewhere at lower rates. This perception might be one of the factors making it
difficult to achieve the objectives of the tonnage tax with relation to increasing the
supply of qualified British junior officers.
The main argument behind the tonnage tax is that as more ship-owners subscribe to it,
they will train more British cadets under the Minimum Training Obligation. This will
lead to an increase in the supply of qualified junior officers. However this primary
argument leaves out the question of employment for these cadets such that, whereas the
companies are forced to train as a requirement, they are under no obligation to employ.
According to government interview data, the issue of employment was never dwelt
upon much during the design of the tonnage tax. As already explained, the government
officials taking part in the study explained that it was only assumed that increased
tonnage, plus increased training, would automatically lead to increased employment for
British junior officers. The employers are however, evidently, not willing to employ UK
junior officers. Furthermore, it is heading to a situation where even senior British
officers are no longer necessarily a favourite of UK ship-owners as the quote below
demonstrates:
We used to reserve the top four posts for British officers but times have
changed, other nationalities have come up the ranks and proved their worth,
not forgetting that they are much cheaper. It goes back to the question of
cost. Now we don’t employ any British at all [Shipping Company, Interview
13]
One major consequence of this situation is that, because cadets are being trained but not
getting job opportunities to propel them up the ladder of experience, the strategy is not
effectively addressing the problem of declining numbers of qualified and experienced
British officers. Instead, the senior ranks are now being filled with foreign officers.
Consequently the negative perception about seafaring that originated with the loss of
employment for British officers in the 1970s and 1980s is perpetuated.
Although cost is by far the greatest influence upon company recruitment policies, the
weighting it is given seems to vary from company to company. For some companies it
is the single most important factor while for others it is one amongst the top factors.
This variation seems to be influenced mainly by the size and specialisation of the
company such that for many of the smaller companies cost is certainly the single most
significant factor. They justify this with the argument that it is becoming increasingly
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hard for them to compete with many of the larger and wealthier companies serving the
same trades. For this reason, every opportunity to reduce ship operation costs is
valuable and low-cost overseas labour presents this opportunity. The view in the
following extract from an interview with one company HR Manager sums up what
many small operators explained:
We are a small company and therefore the primary challenge is always

finding cost effective crews; cost competitiveness. There is always pressure
on the market place to find the crews as cheaply as possible and this is more
so for small rather than big companies who have the resources. The
additional pressure is finding people with certain qualifications and
experience at an affordable cost [Shipping Company, Interview 15].
The larger, wealthier operators, like the oil majors and global container giants thought
differently. For them, there are other factors like environmental safety, the standard of
service they provide and, prestige, all of which sometimes force them to recruit labour
that is not necessarily as cost effective as they would like it to be. A series of tanker
accidents since the Torrey Canyon accident in 1967 have put the spotlight on oil, gas
and chemical transporters. To avoid this negative scrutiny, which might be damaging to
business, many of these major operators seek to provide the highest quality of service
(Sampson, 2004) and adhere to all international conventions like Safety of Lives at Sea
(SOLAS) and Marine Pollution (MARPOL). Furthermore, they want to avoid any
possible disruption of operations by ITF action and Port State Control (PSC) inspections
which could be costly. For these reasons they often take proactive measures to ensure
that their operations are up to the expectation of international and local regulations,
consumers’ expectations, insurers and environmentalists. The manager of one such
company explained:
Cost is always a factor…but our main drive is quality of operations.

Significant risk is involved in transporting oil or gas round the world and we
have invested a lot of money in building sophisticated ships. We cannot then
risk everything that we have built by putting cost first when considering
crews to man these ships. ….so cost is important but not to the extent that
you will accept poor quality. If we have equal quality then we look at cost
The manager of another company said:
Cost is obviously an important part of the equation but in the services we

are operating in it isn’t the ‘be all and end all’ of ship operation [Shipping
Company, Interview 15].
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The picture is not, however, as straightforward as it might appear from such a

straightforward account. It is not a simple large/small; wealthier/poorer company
dichotomy. In an industry where smaller does not necessarily mean less wealthy a lot
depends on the type of trade pursued by the company. The bigger companies like oil
majors and container giants have the capacity to weather cost storms much more easily
than their counterparts in the general tramp 6 trade but there are also much smaller
operators in highly specialised, up- market, trades who control huge capital assets. Such
companies will mostly employ local officers, not because they do not mind the cost but,
because their operations are confined within a particular country or region. For these
companies it would be more expensive to employ foreign seafarers since they have to
incur the extra cost of transporting them to the ships and repatriation at the end of
contracts. When they operate within a certain confined region, for example Europe, it is
much more convenient and less costly to employ from the local market. This, however,
does not mean that the British have an advantage here because, with the expansion of
EU membership, cheaper officers are now available from low-wage member-countries
in Eastern Europe like Poland, Croatia and Romania.
The major players, with significant influence on the global seafaring labour landscape
are the oil majors which diversify their operations into different specialist trades like
LNG and LPG and chemicals, and the global container giants. However it is not just the
trade or the type of ships they operate which makes them influential in the organisation
of the seafaring labour market; it is also because, by sheer size and the global spread of
their operations, they tend to retain large pools of highly trained and qualified labour
unlike tramp operators where seafarer turn-over is higher.
It also seems as if, by the fact that these larger companies have branches and
subsidiaries all round the world, they have a higher capacity to invest in diverse local
labour markets hence, influence patterns in the global demand and supply of seafaring
labour. The Operations Manager of one such company explained:
Because we operate in and maintain large officers in many parts of the

world, you will find that we train cadets and maintain large numbers of
6
Tramp is the term used to refer to ships operating on the spot charter market. Because their trade is
erratic, they operate on the lower market side and most ‘rust-buckets’ are found here. They are more open
to market forces and hence thrive on manipulating costs and the freight market.
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officers from the various countries. We have a very elaborate training

scheme, both for our shore-side managers and cadets, which involves
recruiting bright young people as management trainees as well as cadets
from all over the world…..Much as we benefit from low cost labour from
around the world we also train a lot both in developing countries as well as
developed [Shipping Company, Interview 19].
The study however shows that this is the exception rather than the rule. Many
companies seem contented with recruiting foreign junior officers with little training
input.
From this brief analysis it seems that all companies irrespective of size or trade consider
cost to be one of the most important factors in deciding where to recruit crews. This
makes cost the most influential factor in determining the recruitment and employment
policies for officers within the industry.
6.2.2 Quality, Safety and Environmental Considerations
As I have indicated, many of the ship-owners and operators I interviewed explained that
with growing international environmental concerns and tightening international
regulation, companies are increasingly forced to be more careful about how they operate
their vessels. This includes careful consideration of crewing issues, strict adherence to
staffing regulations and, making efforts to ensure that the crews working on board ships
are well trained and properly qualified. One manager explained this as follows:
Safety of the vessel is ultimate…..the ability of the crew to operate the

vessel effectively, professiona lly and safely……, so we take a lot of trouble
in ensuring that the ships are manned by competent people [Shipping
This, however, does not apply to all operators; company practices vary greatly and there
are indeed many who still operate ‘rust buckets’ because they want to minimise costs
and maximise profits. Indeed, although many of the ‘traditional’ Open Registers have
ratified and do enforce most of the IMO conventions on safety and environment, many
of the ‘new’ ones accommodate most of the worst ships in the world fleet, those which
still merit the ‘rust bucket’ description.
According to many managers, the policies of many shipping companies relating to

crewing have evolved and changed over the years. Whereas previously ship-owners and
operators sought cheap labour and cared less for quality, they are now forced by
circumstances to pay more attention to the quality of their crews in terms of standards of
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national education systems in source countries, the quality of cadet training and, the
system of certification. Although the cost element still remains the most significant item
on their policy agenda, it is now joined by the need to offer a safe and efficient service.
The manager of yet another company said that in his company “….policy on officer
recruitment is now driven by two elements; cost and quality” [Shipping Company,
Interview 10].
Another manager explained that, whereas in the past some companies got by with
aiming to provide the cheapest service, this strategy can no longer work because the
industry is becoming more regulated and the customers (shippers) expect not only
affordable but also high quality services. Another manager explained that apart from
individual state regulations and international conventions, market circumstances, and
the sensitive nature of shipping, are forcing operators towards self-regulation. This
coupled with increasing pressure from environmental concerns, means that many ship-
owners and operators now increasingly compete on the basis of who can provide the
best quality, safest but also affordable shipping services to customers. One company
manager said:
In the 60s, 70s and 80s you got away with providing a shoddy service as
long as it was cheap. Ship-owners went for the cheapest of everything,
including rusty ships. Nobody bothered to scrutinise the qualifications of
crews….hence the term rust buckets. Now you present one of those and
nobody will touch it. It is not because of the law, or the IMO conventions,
the customers simply won’t touch it. The environmentalists will be after you
and the ITF will be your worst nightmare… you will definitely go under…
This quote represents a view that was shared by the large majority of the companies I
visited and it demonstrates what might be an increasing tendency towards self
regulation and what has been referred to as “market-in- virtue” (Bloor et al 2006) and
‘virtuous’ competition (Braithwaite and Drahos, 2000). The notion of ‘virtuous’
competition or ‘markets-in- virtue’ has evolved from studies, in recent years, into the
concept of ‘smart’ regulation or what Bloor et al (2006:538) have described as “a multi-
faceted and flexible system of governance that seeks through incentives to promote
proactive compliance by regulatees” (See also Dorf and Sabel, 1998; Gunningham et al,
1998; Braithwaite and Drahos, 2000; Sabel and Simon, 2004; Sampson, 2004).
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As indicated by Bloor et al (2006), the highly international nature of shipping makes it

an appropriate ground for the growth of this kind of regulation and, indeed, by looking
at recent developments in the shipping industry, elements of ‘smart’ regulation,
identified by the various authors above, are evident. To begin with, from the 1940s to
the 1980s, as discussed in chapter three, the industry went through a systematic process
of de-regulation; national states, faced with the growing influence of Open Registers
and the threat of tonnage flight, eliminated regulations on ship registration, crewing and
almost all other aspects of ship operation. It is this de-regulation that catapulted the
industry from a tightly regulated and nationally controlled one in the 19th century to the
most globalised and deregulated one by the turn of the 20th century (Sampson, 2004).
Shipping companies are effectively ‘stateless’ or, more accurately, the nationality of
ships and their owning/operating companies is often fictitious as observed by Kahveci
and Nichols (2006). They can register their vessels wherever and staff them with
whatever nationality of seafarers without state restriction. The result of such
developments, in the decades following World War Two, until about the 1980s, was
increasing deterioration of ship quality and shipping standards, the growth in numbers
of untrained or poorly trained seafarers on board ships and, consequently deteriorating
services and safety. All this happened because the situation permitted operators to go
for the cheapest possible option in all aspects of ship operation including ship
maintenance and staffing, hence the term ‘rust bucket’ came to be used to describe the
type of ships that dominated international waters and characterised FoC standards.
Since the early 1990s, however, the industry is seeing a slow but steady elaboration of
what can be termed as ‘enforced self- regulation’ in the industry (Bloor et al, 2006). This
form of regulation is not the direct act of governments but rather a mixture of market
pressure and the ‘promise’ of better commercial results pushing ship-owners and
operators towards self-regulation. Another emerging form of regulation is ‘smart
regulation’ whereby companies are forced to improve the standard of their ships in
order to avoid costly action by, for example, Port State Control. There is no doubt that
IMO conventions like MARPOL and SOLAS have had great impact but their
implementation on the ground is more by the ‘smart’ system rather than by the flag-
state machinery which has largely failed as a system of regulation. Recent studies have
examined these two forms of regulation (Sampson, 2004; Bloor et al, 2006) and have
shown that ‘smart’ and ‘enforced self-regulation’ are supposed to force operators into
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proactive compliance with international conventions. In the ‘interview 22’ extract in

page 139, the manager is describing a situation where operators are compelled to
proactively comply with international conventions because, according to the manager,
any operator who attempts to present a poorly maintained ship from a register of
dubious reputation will, most likely, be driven out of the market by pressure from the
ITF, Port State Control (PSC), insurers, classification societies and cargo owners, who
are becoming increasingly sensitive to matters of safety and quality standards. In order
to attract good business and remain profitable and competitive in the market, operators
now have to provide a high quality, efficient and safe shipping service. In other words
they are driven by a combination of pressure and incentives into ‘markets in virtue’
(Braithwaite, 2005), or ‘virtuous’ competition (Braithwaite and Drahos, 2000).
Although these forms of regulation offer a potentially effective alternative to the flag-
state regime, there potential is yet to be fully harnessed. At the present, they are not as
effective as they could be. Furthermore, evidence of their application is so far restricted
to the tanker sector (Sampson, 2004; Bloor et al, 2006).
Following popular perception, one would expect that this new wave of self regulation
and competition based on quality rather than cost would influence a change in company
recruitment policy to favour officers from Industrialised Maritime Nations with all their
training facilities and their long standing seafaring traditions. Apparently this has not
been the case. Companies are in search of both high quality and low costs. The move
towards self regulation with regard to crewing matters has influenced many companies,
according to the HR Managers participating in the study, to develop overseas labour
sources to their required standards by investing in training infrastructures and
programmes in various labour supply countries. Also by paying more attention and
monitoring the recruitment process they are able to get “the best at a competitive price”
According to many of the industry managers I interviewed this still works out much
cheaper than employing a British officer, as one explained:
It does not necessarily mean that we will, in that case, resort to employing
the British. No, we put measures in place to ensure that we are getting the
best. Let me tell you one thing, even after all the investment in recruiting
and training Polish cadets, including all the internal company training
programmes we offer, it still works out much cheaper for us at the end of
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the day. So, there you go, we kill two birds with one stone; we get quality at
a good price [Shipping Company, Interview 1].
The impact of such argument is detrimental, not just to the employment of qualified
British junior officers by UK based companies, but also, and most importantly, to cadet
training. It raises many pertinent questions about the appropriateness, therefore, of the
tonnage tax as the main strategy for the recovery of British shipping skills
6.2.3 Reliability of Supply.

The other determinant of company recruitment policies is the sustainability of labour
supply. Many of the company Human Resource Managers I interviewed explained that,
in addition to the main determinants (cost and quality), the sustainability of a source of
labour is a major and important consideration. They explained that, apart from low
wages, sustainable supply is the main attraction for companies to developing countries,
accessing the huge reserves of skilled labour.
By contrast, this is increasingly becoming the discouraging factor for many companies
when considering developing their labour in-high cost countries like Britain. According
to many industry managers, the once rich and strong seafaring tradition in the UK is
disappearing. One manager, who was a former master mariner, exp lained that over the
years his company had noticed an increasing unwillingness among the new generation
of British people to commit to seafaring, unlike other nationalities and the older
generation of British officers. Thus:
It is not like the old days whe n your family was in seafaring and you just
had to follow suit. The seafaring tradition was strong then and shipping was
more visible on our shores. Now, that tradition is largely dead and young
people want to join “sexier” professions than seafaring. Even those who join
do not want to stay for long [Shipping Company, Interview 25].
This, according to him, means that, aside from the decline in the general supply of
labour due to the demographic structure of the British labour market, attempting to rely
on the British supply would be unwise because officers do not want to stay at sea for
long. In the long run it would cost the company a lot to develop the source with little
economic benefit. Another manager associated this trend to the increasing availability of
a wide variety of career choices for the British youth and changing perception of sea
careers among them. He explained:
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The British youth are spoilt with choice nowadays. They are unable to
commit to the kind of lifestyle that seafaring offers because seafaring is not
an easy life; it means many months away from family and friends doing
very hard work for long hours, in dangerous situations. Our economy now
offers many, much more comfortable and easier career choices ashore.
Seafaring, like many other vocational careers, has also come to be perceived
as a career for those who are not academically successful and this puts off
many would be good quality officers [Shipping Company, Interview 5].
According to many employers, in the shipping industry, therefo re, the British source of
seafaring labour has become unreliable. Another manager compared the level of career
commitment between officers from new labour supply countries and that of the British,
and most of the developed high-cost Nations, and concluded that British junior officers
no longer wanted to commit to a long career at sea, unlike previously when the average
officer served between fifteen and twenty years at sea:
Those who are really interested in working in the maritime sector want to
work ashore. Very few are willing to give the kind of commitment that the
industry expects. The Polish, the Croatians and the Filipinos are more
reliable in this sense. We are beginning to see the same lack of commitment
from the Indians as well; they used to be a very reliable source [Shipping
Of all the managers I interviewed for the study around 95 percent argued that British
people are no longer willing to work at sea and therefore very few wanted to train as sea
cadets. Looking at training trends in the UK over the past three decades, the intake
levels dropped to less than 1000 in the mid 1990s from over 4000 cadets per year in the
1970s. Many company managers used this decline to support the argument that British
people are no longer interested in seafaring careers. They argued that this, combined
with decreasing retention rates for qualified officers reinforced the industry view that
British officers are not reliable (See Obando-Rojas, 1999; Gardner, et at, 2001).
However in the absence of empirical evidence to support this supposed ‘lack of interest
and commitment’, it is difficult to ascertain the correctness of the assertion. Indeed there
is evidence to the contrary given that cadet intake has increased since the introduction of
the MTO. Furthermore, considering that there is obvious preference for low-cost
officers among operators, one wonders the extent to which this claim might actually be
designed to make a case and create justification for companies’ preference for foreign
officers. Whether the claim is true or not, the economic motivation for employers to
invest in developing seafaring labour locally is clearly undermined by this perceived
lack of reliability. As one manager explained:
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What is the economic sense in investing in training and developing a labour

source that is not going to last. British people no longer want to go to sea,
period! We know it and we have seen their level of commitment decline
over the years. When they join, they don’t stay for long. So it does not make
for a viable economic undertaking [Shipping Company, Interview 17].
There are a number of possible explanations proffered for the increasing unreliability of
the British source of shipping labour. These include: increasing alternative career
options for the youth in land-based IT related industries, the perception that seafaring is
a hard, stressful and emotionally draining occupation (what one manager described as,
‘the disturbing false notion of comfortable lifestyle among the youth these days’
[Shipping Company Interview 17] and, the perception that “seafaring has become a
third world occupation” [Recruitment Agency, Interview 8].
The issue of unreliability and ‘lack of interest’, which the employers here present to
justify their recruitment policies, will be revisited in chapter seven in which the views of
cadets will be analysed. What seems clear from this analysis of the factors driving
company recruitment policies is that most of the UK-based employers prefer to recruit
foreign officers. The next step is to try and understand how this affects cadet training
activities and undermines the government’s efforts to increase the number of qualified
junior officers in the UK.
6.3 Companies’ Commitment to Training

The accounts of shipping company managers on their commitment to cadet training
seem to vary from one to the other and, seemingly, depend on a number of factors but,
primarily they are influenced by individual companies’ recruitment policies and
strategies. Some of the factors identified in the data include the size of the company, the
trade specialisation of the company and to some extent the socio- historical roots of the
company. Size is the most significant factor here because when talking about the
number of officers employed by a company I am referring to the total company pool
rather than on a ship-by-ship basis. In this way, the influence of larger companies is
greater because they are able to draw on a large labour pool as opposed to smaller ones
with fewer vessels.
Many of the big companies seem to have elaborate training programmes and train the
largest number of cadets in the UK as well as elsewhere in the labour supply world.
According to them, because of their size and the kind of services they offer, they cannot
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afford the ‘short-termist’ approach that the smaller and ‘general-trade’ operators follow.
They further argued that, quality, reliability and efficiency are the greatest
considerations which, in one way or the other, link with the quality and experience of
crews running their vessels. This also explains the tendency towards ‘proactive
compliance’ with regulations or ‘smart’ regulation on the part of some companies.
According to company managers, companies go to great lengths to establish a
prestigious market position in order to attract the best business and avoid unnecessary,
costly delays and inconveniences caused by Port State Control and ITF inspections and
detention.
In an interview with the commercial manager of one such company, he explained that
the company’s rigorous training programme had nothing to do with any external
training commitment. He explained that the company had its objectives and targets and
did not need external pressure in order to act in any direction. He pointed out that his
company was not in the tonnage tax but had always trained British cadets for its own
projected future needs:
No, we are not in the tonnage tax……We have always trained cadets in the
UK, even when all other companies stopped 20 years ago…….We are
committed to quality and we train for our needs and to our standards both
here in the UK and in our other sources overseas[Shipping Company,
Interview 5]
This does not, however, mean that cost is of no consequence. When I inquired about the
cost factor and whether his company had moved to take advantage of low-wage labour
from overseas, he said:
Of course we have, who wouldn’t? [But] we do not just go to the open

market and ‘cherry-pick’. We are very careful and we prefer to train our
own people so we invest a lot of money on training programmes in many
countries….We are a big company, our ships are registered in many
countries and we develop and make use of local labour in all those countries
Most of the big companies aired more-or-less the same view. For the smaller companies,
however, the story was different. Some of these companies claim that they face the
brunt of global competition more than their bigger and wealthier counterparts who
benefit greatly from economies of scale. Their reliance on foreign, low-wage, labour is
therefore greater and, because of this, some said that the minimum training commitment
is just a requirement they have to fulfil:
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To be honest with you, we train because we have to. As I said earlier, we

don’t employ British junior officers at all so taking on British cadets is
rather meaningless to us……we have always held the opinion that it is
unfair to train young people, give them career hopes then don’t give them
jobs after their training. It is wrong, we don’t like to do it, but we do, what I
can say… [Shipping Company, Interview 13]
Those companies with vessels operating in European coastal trades and ferry services
are more likely to employ British than foreign officers hence they are likely to employ
more of the cadets they train. According to the operations manger of one such company,
if a training company needs British junior officers, it “gives the training commitment
practical meaning” [Shipping Company, Interview 2].
Others who indicated a greater commitment to the training obligation included operators
of highly specialised, high-tech vessels like Liquefied Natural Gas (LNG) carriers,
reefers and Liquefied Petroleum Gas (LPG) carriers and chemical carriers, although,
these were often affiliated to, or integral parts of, the larger companies discussed above.
According to one manager most operators in these trades have more confidence in the
training programmes and facilities in industrialised maritime nations like Britain than in
developing non-maritime countries hence they recruit more from such markets for these
specialised operations:
Although we are, of late, getting highly qualified people from less

industrialised non-maritime countries like Poland, Croatia, and the
Philippines, we have always relied on officers from developed countries
because these trades are very sensitive and delicate and we have confidence
in the training facilities and programmes in countries like Britain….. There
is therefore some benefit for us to train British cadets [Shipping Company,
Interview 5]
An interesting category of companies, who also expressed greater commitment to

training British cadets, is that comprising family-owned companies. For these
companies, although few in number, training and employing British cadets seems to be
more for nostalgic and patriotic rather than economic reasons. The manager of one such
company explained:
We continue to train British cadets and employ some, not because we

heavily rely on the British pool anymore but, because being a family
company which has used British seafarers for over a century and half, we
feel an obligation to continue training and we have continued to do so even
before the tonnage tax was introduced…. I guess it is a matter of tradition
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Such companies once dominated British shipping in the days when it was a family-
owned and operated industry and they recruited seafarers locally and trained them
though the traditional apprentice system. Their vessels were UK registered and mostly
plied European coastal routes. Even when they started operating internationally, they
still retained their traditional base in the UK and drew their crews from the local pool.
From the 1980s onwards, though, such companies have experienced stiff international
competition. With these have come cost pressures to flag out vessels and employ
foreign crews. This pressure has driven many, either completely out of the market, or
transformed them into the global outfits that now dominate global shipping through
mergers and takeovers. Very few remain intact but are often small and exert little
influence because they are unable to continue training and employing large numbers of
British officers. The disappearance of these traditional family-owned British companies
has obviously had a huge and negative impact on seafaring labour in the UK
It seems that, perhaps, the tonnage tax minimum training commitment is undermined by
the lack of that essential link which the manager quoted earlier describes as “practical
meaning” (p. 152). Although, according to government officials, all the companies are
indeed training, many do not have any real commitment to the training obligation
because they do not require the cadets they train. Because of this, it has been suggested
that there are many problems in the process of cadet intake and training which results in
two outcomes: high drop-out rates and a poorer quality of the junior officers coming out
of the process. Many of the training agencies attribute this to that ‘missing essential
link’ – employment – as suggested in the following two quotes:
If companies needed British junior officers, they would train more and pay
more attention to the process, unfortunately they don’t and it affects the
whole exercise [Training Agency, Interview 9]
This view confirms the effect of the absence of the ‘practical meaning’ link and
emphasises the difficulty of the task of trying to increase local training activities without
this link. According to another interviewee, this is possibly the link that is missing from
the tonnage tax training commitment:
Many of the cadets soon realise that the sponsoring companies are not
necessarily going to employ them. In addition to other factors this is a major
reason for the high dropout rates and the overall failure of the strategy
[Recruitment Agency, Interview 8].
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The view is that unless the sponsoring companies are able to assure their cadets of a
future in the career they have embarked on dropout rates will continue to rise.
Unfortunately the companies are not in a position to do this because they are not
committed to employing their cadets. As the personnel manager of a company explained,
“we do not want to lie to our young people, the fact is that we do not have jobs for them,
saying otherwise would be a blatant lie” [Shipping Company, Interview 2].
6.4 Implications
The above outline of company recruitment policies should not be taken to mean that all
UK-based companies no longer genuinely invest in the training of British cadets. I have
explained earlier that those companies operating ships within the tonnage tax have a
commitment to train as a qualifying pre-condition. There are companies which train on
their own accord, for their specific manpower needs, irrespective of the tonnage tax
training commitment. The important point to explore here is the extent to which the
prevalent policy among companies is influenced by state efforts to increase cadet
training in the UK.
Company recruitment and employment policies are, seemingly, linked with cadet
training activity. Economic logic dictates that a company will only invest willingly in
the training infrastructure and programmes of countries of interest as sources of labour.
Unless, therefore, UK domiciled shipping companies have genuine recruitment and
employment interests in the UK, they are less likely to, willingly and genuinely, commit
substantial funds and energies to developing the British shipping labour force. How
much commitment they put into training is therefore proportional to and dictated by
their commercial interest in the UK seafaring labour force. Whereas the foregoing
analysis of company recruitment policies does not show a complete lack of ‘manpower’
interest in the UK for ship operators, it does, however, suggest that interest in training
activities by these companies is limited by the fact that they have no employment
interest in the pool of British junior officers.
Those few companies which spend money and energy in training British cadets do so
because they have a long term interest in the source. They therefore go to great lengths
to make sure that their cadets are chosen well and treated well both in college and at sea.
They are interested in training, employing and promoting their cadets through the ranks
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to senior positions on board and eventually ashore. The manager of one such company
explained:
Apart from spending time, money and energies in developing and

maintaining our labour sources worldwide, we are committed to maintaining
a long-term core pool in the UK. It makes sense to us because we prefer to
have a significant number of British senior officers on our ships….we feel
confident…..so we must invest in training [Shipping Company, Interview 5].
This clearly indicates that those companies which train and retain most of the cadets
they recruit are those whose recruitment policies support strong staff and skills
development. Unfortunately, according to the evidence in the data, such companies are
very few. The majority are mostly interested in seeking cheap labour and do not want to
invest anything in developing it anywhere in the world. For such companies, the
Minimum Training Obligation is just a criteria and not a genuine commitment to
develop seafaring skills in the UK.
The analysis of the data in this chapter strongly suggests that the main driving factor
behind company recruitment policies is cost. The other factors, of quality and supply,
are secondary, though not insignificant, to most companies involved in the research.
This has pushed many companies to invest in training officers in labour supply
countries instead of reverting to their traditional sources in developed countries.
The same may be said about supply. Many companies have cited unreliable supply of
shipping labour in developed countries as one of the reasons for seeking officers abroad.
This may be so now but only to a very small extent. It is worth remembering that the
diminishing supply of seafaring labour in the industrialised maritime countries has come
about as a direct result of companies’ recruitment practices over the years. These
practices are motivated by the quest for lower operations costs. It is therefore more
correct to say that company policies have influenced diminishing labour supply in
developed countries rather than otherwise. Companies however seem to quote these
factors as a justification to the ir arguments on costs, most likely, because it mitigates
their profit driven corporate practices which have led to the near demise of, once great,
pools of highly qualified officers in industrialised countries while driving the wages for
seafarers worldwide down.
In the next chapter I will revisit some of the issues raised and discussed here and
examine further how company recruitment policies have affected training efforts in the
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UK. I will examine further some of the arguments introduced here about the wavering
commitment of many UK-based companies regarding the training of British cadets and
critically assess the claim by many of the industry managers that British people are no
longer interested in sea careers.
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CHAPTER SEVEN
Cadet Training in the UK
Introduction
Having looked at the companies, their officer recruitment policies, and general response
to the tonnage tax in relation to cadet training, I will now focus on the actual
organisation and process of cadet training and discuss the various issues which might be
hindering the successful rebuilding of seafaring skills in the UK. This chapter also
presents the ‘other side of the story’ and will focus on cadets, their expectations as
trainees and their training experiences. It discusses the views of training college staff
and those working for training agencies with reference to the cadet training approach,
establishment and policy.
As a Traditional Maritime Nation, with a long shipping and seafaring tradition, the UK
has a well established seafarer training programme. The structure and organisation of
this programme is complex and involves many bodies and interest groups. The basic
programme brings together five main bodies as detailed below:
• Training agencies advertise cadetships, recruit and allocate cadets to colleges

and take care of them during their training programmes on behalf of
“sponsoring” companies;
• Training colleges are responsible for designing and running training

programmes, and maintaining equipment and facilities;
• Shipping companies are the main training sponsors in conjunction with the
government and who may directly recruit cadets, allocate them to colleges and
support them throughout their training;
• The Merchant Navy Training Board (MNTB) is the industry’s body

responsible for coordinating the development and promotion of seafarer training
and qualification, and works closely with the government and colleges in
developing and promoting cadet training programmes and;
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• The Maritime and Coastguard Agency (MCA) is the government agency

responsible for monitoring the standard of training and certification of seafarers
and operates a Seafarers Training and Certification branch which administers
and regulates the training and certification of personnel in the Merchant Navy.
Although all these bodies play a vital role in the training of seafarers, the primary
responsibility for recruitment and training rests with the colleges, shipping companies,
and training agencies which make up the core training structure. These parties are meant
to work together to ensure a high standard of training, good training experiences for
cadets, and, ultimately, a high output of well qualified and competent junior officers.
General evidence, however, suggests that the number of qualified junior officers has not
increased sufficiently, as anticipated. The question as to why this is the case forms the
main focus of this chapter.
The discussion in chapter five has shown that many companies lack the motivation to
train cadets in the UK because they have no particular commercial interest in British
junior officers. The data from ex-cadets, training agencies and cadet colleges show that,
because of this lack of motivation, companies are not actively and positively
underwriting cadet training hence not encouraging their retention in the industry.
Instead, companies with a training commitment, as part of their obligations under the
tonnage tax, are passing their ‘duties’ over to training agencies. Data collected from
cadets, and the staff of training colleges, suggest that this is having a highly detrimental
effect on the quality of training provision and is resulting in high dropout rates.
One of the problems is that cadets commit to training at a very young age, normally
between 16 and 18, and require a great deal of support which many training agencies do
not seem prepared to give. This, and the non-committal attitude from sponsoring
companies, who are also potential employers, is driving increasing cadet wastage and
frustrating government efforts to increase shipping skills. The problem, therefore, is not
just that of demand and supply. Shifting patterns of international demand and supply for
seafarers form part of a socio-economic vortex of factors which ultimately lead to the
demoralisation surrounding the entire cadet training establishment in the UK and many
other industrialised nations. Seemingly, the real problem is caused by a breakdown in
the local shipping skills development system (Obando-Rojas et al, 1999).
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I will argue in this chapter that the industry has ‘conve niently’ adopted the mantra that
seafaring is no longer attractive to the British people and that youth in Britain are no
longer enthusiastic about sea careers. This discourse serves to perpetuate and legitimise
companies’ unwillingness to train and employ British junior officers for their economic
expedience. The chapter is organised in six sections. Section one describes how cadets
are selected and allocated to colleges and highlights the role of training companies,
while section two examines the role of training colleges and describes the various cadet
schemes they offer. Section three explores the main problems which affect the entire
process of selection, allocation and training after which section four discusses the
resulting training atmosphere and cadet training experiences and assesses the
implication on training outputs. Section five describes the dilemma presented by the
conflict between the interests of labour and capital interests and suggests that this
dilemma creates structural failures in the cadet training system which undermine cadet
retention. Section six critically assesses the arguments developed in earlier sections in
relation to the ‘myth’ of ‘diminishing career attractiveness’ as presented by the industry.
7.1 Cadet Selection and Allocation

The cadet selection and allocation process primarily involves three actors, shipping
companies, training agencies, and cadet training colleges. Mainly, however, it is
shipping companies and their training agents which coordinate the selection exercise.
On the surface, the process appears simple. Shipping companies and/or training agents
advertise training positions in accordance with either their manpower needs or their
training obligation under the tonnage tax. They then process applications and allocate
successful candidates to the various colleges to begin their training. In recent years,
however, it appears that this role is being taken over by training agencies and shipping
companies are taking on a more background and supervisory role.
In the UK merchant shipping training establishment, shipping companies are the main
sponsors of cadets under the Minimum Training Obligation established under the
tonnage tax regime. These companies, however, often fulfil their training obligations
through specia list training agencies who take over most of the responsibility for cadet
training, as agents, on behalf of their ‘principals’. Once the shipping company has
indicated the number of cadetships available to fulfil its training quota, the training
agency advertises them, mainly targeting O- level and A- level school leavers. They then
- 154 -
sieve through the applications and select the most eligible candidates for the cadetships
who are subsequently put through a rigorous selection process until the desired number
and quality of cadets are picked.
During the training process the agencies continue to play an important role in
representing the shipping companies in areas such as managing cadets’ subsistence
remittances. They allocate trainees to training berths for practical sea training and all
other duties necessary for the successful completion of the cadets’ training, although
this latter role may be closely supervised by some companies. Training agents are
therefore very important and their role is key and central to the entire training equation.
The role of training agencies does not begin and end with recruitment and training. It
has become their responsibility to actively promote careers at sea as well as market the
various cadetships offered by their principals. Whereas formerly individuals used to
apply directly to shipping companies for training positions, now they often apply
directly to training agencies who advertise such positions on behalf of the shipping
companies. Their role is clearly summarised in the interview extract below:
Our duties are many. In addition to recruiting and allocating cadets to

colleges on behalf of our clients, it is our responsibility to promote and
market seafaring careers and therefore we have an important role to play in
keeping the seafaring tradition alive [Training Agency, Interview 21]
There are many suc h training agencies in the UK but only three stand out as the major
players and command about 90% of the cadet recruitment and training market amongst
them. Two of the agencies I interviewed represent a clientele of eighty-two companies
and the third which doubles in ship management as well as training has established its
own training institutions in a number of labour supply countries in order to enhance its
capacity to train and supply seafarers on a global scale. Though based in the UK all the
major agencies operate internationally and, because of the nature of their role, some of
them are gradually evolving into training-come-officer recruitment companies.
My interviews with training colleges and shipping companies confirmed the central role
played by such agencies by revealing that nearly all cadets in the UK are recruited by
training companies. The following interview with a college source demonstrates this:
We do not recruit any cadets directly; all our cadets are allocated to us by
training companies acting on behalf of shipping companies…. It is mostly
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the training companies we tend to deal with rather than the main sponsors
on matters directly relating to cadets and their training [College Interview 2].
Apparently the reason why most shipping companies prefer to delegate most of their
training responsibilities to agencies is that it is a big task for which they have no
capacity in terms of time and personnel. Furthermore, as the following interview extract
from a company source indicates, they feel that the more specialised agencies are better
placed for this kind of work:
We simply do not have sufficient resources to enable us get directly

involved in the whole exercise. It is too time consuming so we leave it to the
training companies who are better placed to do it [Shipping Company,
Interview 15].
Although data from training agents and cadet college staff might suggest that all
companies delegate the entire training responsibility to their agents, it appears, from
company interview data, that some of them do get involved in some or most of the
training process. Seemingly such companies often vet the qualifications of their cadets
and take an active supervisory role in the entire training process. This second company
source demonstrates this clearly:
We are involved from the first step all the way to the end. We use training
companies, alright, but that is just because they have the facilities and the
know-how. They are much better equipped for this role than we are but that
does not mean that we let then run a free show [Shipping Company,
Interview 5].
As suggested in chapter six, some companies, such as the one represented by the quote
above, have adopted such active invo lvement in training because they are more likely to
employ their cadets at the end of the training as junior officers on their ships. One
company executive in charge of cadet training explained:
These are our cadets and people who we are likely to employ as officers on-
board our ships, so we monitor closely and give all the support necessary
The executive quoted above explained that the company has an active training
programme aimed at developing a sustainable pool of sea-staff and they, almost always,
employ their cadets as long as they perform well in their training. Because of this they
find it in their best interests to ensure that they get the best quality cadets and that the
cadets get the best training possible.
- 156 -
Many companies, however, have no such long term interest in the cadets they recruit
hence see little benefit in getting so involved. The quality of cadets recruited and the
quality of training they get is therefore of no immediate consequence to them.
Unfortunately this kind of company attitude engenders an unsupportive approach on the
part of their training agents which, as I will explain in later sections, leads to poor
training experiences for cadets many of whom decide to drop out of training. In this
respect, it is perhaps easy to imagine that the training agencies representing such
principals, would similarly adopt a non-committal approach towards the cadets in
question. The training agent’s attitude will, in most cases, be as ‘good’ as that of its
principal as the following extract from an interview with a training agency source
demonstrates:
We represent many types of companies, some of which are more

responsible than others. I know many training companies have been accused
of not taking good care of cadets but I want you to understand that we can
only be as good as the company we represent. Ultimately we are only agents
[Training Agency, Interview 9]
As I have already indicated, cadet recruitment in the UK is mostly carried out by

training agencies. Training colleges do not get involved in the selection process and
only a few shipping companies get directly involved in actual selection. Some shipping
companies may advertise training positions and colleges routinely advertise the training
programmes they offer but there is always reference to training companies for further
information on application and sponsorship.
Training companies attract applications by vigorously advertising and promoting the

cadetships offered by their principals through the media and career promotion activities
organised in colleges, schools and career centres around the country as the following
extract shows:
We run advertisements of the programmes we offer through both print and

electronic media and we try to invent innovative ways of attracting the
attention of the appropriate age and quality of people in our adverts.
[Training Agency, Interview 21].
There are some sponsoring companies which take a more active role in this process and
they will often dictate the selection process to ensure that they get the type of cadets
they want. One company personnel manager described his involvement in this process
as follows:
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We like to make sure that we are getting the best candidates so we set some
guidelines for our agents to follow and also monitor the process closely. The
final selection stage is here at our offices where we invite the candidates,
talk to them show them around and make them feel at home … it is
important to establish that relationship right from the start and begin to build
confidence in the lads [Shipping Company, Interview 5]
After the selection process is completed, the cadets are allocated to various training
colleges to begin their training. In the next section I will describe the role of training
colleges in the UK and outline and describe the various cadet schemes they offer as well
as describe the various training paths available to British Cadets.
7.2 Training Colleges and Cadet Schemes

Training colleges form the central units in the cadet training establishment and are
responsible for the actual design and running of training programmes and schemes as
well as examinations in conjunction with the MCA. Their responsibility is to acquire
and maintain high quality training equipment and facilities and to provide training for
cadets. Although there are many training outfits in the UK, there are only five main
recognised institutions spread across the country and they run a range of training
programmes which cover a wide spectrum of maritime education and training from
‘deck’ and ‘engine-room’ officer cadets.
The fact that most of these institutions are associated, and collaborate, with fully
fledged and well established universities is an indication of their aspiration for
excellence in cadet training. According to the staff of the various colleges participating
in the study, this collaboration enables them to tap into the advanced facilities and wide
range of expertise available in these universities in order to strengthen the development
and administration of their education and training programmes.
Once the trainees have been allocated, the colleges take up the responsibility of
transforming them into qualified junior officers through a number of training schemes.
Throughout the training the college administration works closely with the other
responsible parties, shipping companies, training agencies and the MCA in order to
ensure the smooth running of the training programme. For instance the MCA and the
colleges work closely together, monitoring and assessing the cadets’ ship-board
practical training, administering final examinations and conferring qualifications to
those who pass.
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The colleges run a variety of schemes for cadets whose general structure and content
depends on the cadets’ entry point and training path. These are all designed to prepare
the trainees for the MCA Officer of the Watch (OOW) examinations. There are also
other parallel support courses provided by the colleges for serving officers who wish to
advance their careers as well as independent shore side programmes for shore-side
management personnel (see appendix 6).
The mainstream seafaring courses cover the whole spectrum of marine education
including navigation, operations, mechanical and electrical engineering,
communications, safety and catering. The entire cadet programme is organised in such a
way that trainees cover theoretical courses and practical college-based programmes,
using simulators, and sea-based practical training on-board various merchant vessels.
All the training schemes offered in all the colleges operate mainly under the auspices of
the International Maritime Organisation Standards of Training and Certification of
Watchkeepers (STCW 95).
The average period for whole cadet training course is three years from the beginning to
the point of qualification with a third mate’s OOW ticket. During this period cadets go
through five to seven training phases which are divided into college and sea-based
training alternately. By the time they qualify, cadets are deemed to have acquired
sufficient theoretical knowledge, and ship-board practical skills, to enable them to
perform their duties as competent junior officers at sea.
There are three routes to the final officer qualification and certification: the Higher
National Diploma (HND) in nautical studies, the newly introduced Foundation Degree
(FD) in maritime studies (from September 2006) and the Bachelor of Science (B. Sc)
degree in maritime studies. In order to equip cadets with both academic knowledge and
practical ship-operation skills the HND and the B.Sc courses are accompanied by NVQ
(National Vocational Qualification) qualifications such that, while HND and B.SC are
college-based and provide the academic and theoretical knowledge, the NVQ is ship-
based and provides practical skills and is based on successful completion of an MCA
portfolio of practical assignments. This portfolio which, in the end, is an indication of
the ship-board skills the cadet has acquired is monitored and assessed by the training
officer on-board and forms the basis for MCA certification at the end of the programme.
On successful completion of the course, cadets are awarded NVQ level three in addition
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to their HND or B.Sc (Hons). The Foundation Degree is slightly different in the respect
that the MNTB has introduced an emphasis on management as well as practical
seafaring skills.
Though the structure of the courses offered may vary slightly from one institution to
another, the general schemes follow the structure described above and, for every path
(HND, B.Sc and FD), there are both deck and engineering schemes. In addition to the
mainstream cadet training programme outlined above, nautical colleges have, in recent
years, started offering an increasing number of other courses designed to develop skills
for the shore-based maritime sector. It appears that the reason for this, as one cadet
administrator explained, is that:
There is need to respond to changing market requirements. There is a big

demand for qualified people to work in these shore-side management and
operations firms, people who do not necessarily need seafaring skills, so we
are trying to tailor our programmes to reflect this demand [College
Interview 1]
It seems that, as the maritime sector grows and becomes more complex, there is a need
for expansion and greater sophistication in training programmes to cater for the
changing requirements. One important development in the past two decades is a gradual
move away from absolute dependency on overspill from shipping skills to cater for the
needs of the wider shore-side maritime sector. Because the shortage in shore-side
maritime skills is becoming more evident and the flow of seafaring skills to the shore is
becoming less reliable, the industry is beginning to experiment with alternative and
shore-based ways of raising the required labour. This is being achieved by designing
training programmes which are ‘tailor- made’ for shore-side maritime technical and
commercial operations and management personnel. In the words of the personnel
manager of one shipping company:
People working ashore need not necessarily be holders of masters’ tickets.

We can train people specifically for the jobs ashore by developing tailored
courses complemented by stints at sea for some practical sea experience.
Who said that you have to be a qualified and experienced ships officer in
order to manage ships…. Not necessarily [Shipping Company, Interview 22]
However, because the shore-side maritime sector still continues to rely on skills
developed ‘at sea’ and, as an indication of the changing times and the growing
sophistication of the industry, there are extra courses designed to equip serving ships’
- 160 -
officers with management skills. As the training administrator of one training company
explained:
The time when seafarers were considered simply as ‘deck’ and ‘engine-
room hands’ is gone; the work of an officer is very demanding and
complicated. Officers are managers of the ship and the ship is a complete
and complicated establishment; there are HR issues, cargo management, IT
and communication management and so forth. Training schemes are
changing to accommodate these aspects which were never considered before
[Training Agency, Interview 21]
Such officers are therefore supposed to be well prepared for their eventual role as shore-
side ship managers. An MNTB official explained that apart from raising the
professional standing of seafaring, these changes are also in response to the high
demand for people with seafaring experience to work in management positions ashore.
Officers coming through these new training schemes are well equipped with the
appropriate skills so that when they want to move ashore, they are able to fit in without
the necessity for extensive retraining. They do not just possess seafaring skills but also
the enhanced maritime as well as academic qualifications to match those of other
management personnel ashore. As noted by an MNTB official:
Officer training now has a higher academic and management skills content
which means that we are equipping the cadets with essential knowledge and
competencies necessary for the shore-side management positions they will
eventually fill… At the end of the day they have the same degree
qualifications as their counterparts in IT related firms but with the added
advantage of being highly skilled in their specific field of maritime
management [MNTB Interview]
The end result of these innovations, it seems, is to make the training more ‘meaningful’
and appealing and ultimately rewarding for both the individuals and the industry while
at the same time meeting the changing skills demands in the industry as well as the
wider maritime sector.
Such courses are designed either as full- time management programmes or as part-time
and on- going courses for continuous in-service skills enhancement for officers. Some of
them include maritime safety management training, cargo and ship handling, security
training, engine-room systems and management short courses. Some companies have
even introduced Computer Based Training Programmes (CBT) on-board for both deck
and engine-room personnel in order to ensure that their personnel are continuously
engaged in training so as to keep their skills updated.
- 161 -
7.3 Cadet Selection and Training

There are a number of issues which are likely to affect cadet selection, training and,
ultimately, the overall training output. It appears that these are problems relating largely
to the prevailing training and employment environment in the UK, although, views on
what the main problem is seems to depend on perspective. In this section, I will present
and discuss data showing how the various main ‘actors’ in the training structure
(training colleges, training agencies, shipping companies and cadets) interpret and
understand the problems hindering successful seafarer skills development and
replenishment in the UK.
7.3.1 The Corporate Perspective

A majority of shipping companies and training agencies seem to believe that the
problem is created by a combination of three factors, that is, lack of interest in seafaring
careers, the young age of cadet trainees and a generally low academic aptitude of
applicants to cadetships. The overall corporate argument, therefore, presents the image
of a society in which the youth are both incapable and unwilling to undertake sea
careers.
According to many of the Human Resource Managers of shipping companies interest in

seafaring careers among the youth in the UK has declined to a level whereby the society
can no longer supply merchant navy officers. As I have already indicated in chapter six,
about 95% of those interviewed expressed this concern. In the view of one training
agency manager, it is becoming increasingly difficult to attract young people to work at
sea. He said:
….but it is so difficult to attract enough [candidates] to pick and choose

from. We just get a handful of applications each year because it is no longer
a particularly attractive career. People are no longer interested to work at sea;
it is a real difficulty [Training Agency, Interview 9].
A HR Manager of one company seemed to share the same view that British youth do
not want to go to sea and went ahead to explain that:
Very few British youngsters want to go to sea as a career… it is very

difficult to make a life at sea. It is quite remote when you are at sea even
with the internet and the e- mail systems being set up on board. There is that
need to be in contact with friends and family [Shipping Company, Interview
13].
- 162 -
From the data, it appears that almost all shipping companies and training agencies
support this argument and some of them came out ve ry strongly to defend it as the
following extract from an interview with one company manager indicates:
Our company is involved in cadet training and recruits cadets from the UK
but this has been decreasing with time mainly because the number of British
people wanting to go to sea seems to be drying up. Seafaring is simply not
an interesting career anymore. I wouldn’t go back to sea whatever it paid,
and even if you paid me double what I am paid here I wouldn’t consider it.
There are many other better and less stressful alternatives for the young
people in Britain and they are clearly taking them [Shipping Company,
Interview 22].
Another HR Manager described his company’s frustrations in the process of trying to

meet the Minimum Training Obligation as follows:
It is difficult, I tell you, and it is frustrating. Getting people who want to join
the merchant navy is proving to be very difficult. It seems that most of our
young people would prefer a career ashore rather than go to sea and maybe
one can understand but it is hurting our efforts to recruit British cadets
What is interesting to note is that most of these interviewees started their careers as
officers at sea and many of them hold masters’ or chief engineers’ tickets with many
years of seafaring experience. The strong belief in the diminishing attractiveness of
seafaring as a career for British youth therefore seems to be based on their personal
experiences or in a comparison to the times of their service. However, the near
unanimous and ‘sweeping’ declaration that British people do not want to go to sea
anymore, is not backed by any concrete evidence. It sounds like a well rehearsed
popular ‘tune’ among corporate industry practitioners.
There were some managers, albeit few, whose views on the matter did not fit in with
this wider corporate perspective. These strongly dismissed the idea that seafaring was
no longer attractive and suggested that the problem lies elsewhere. In the following
extract, for instance, the manager clearly thinks that the view is incorrect:
The view that a career at sea is not interesting is rubbish, I don’t agree with
it. Our business is so interesting and so diverse but the job is as interesting
as you make it and so we have tried, over the years, to make the jobs of our
officers rewarding [Shipping Company, Interview 2]
- 163 -
On the issue of attracting young people to sea careers a few of these companies and
agencies were of the view that there were many people wanting to go to sea but that
getting the m in, as the following extract suggests, depended on the efforts of individual
companies to reach them:
Everything needs hard work, a lot of hard work. So, you can not sit and
expect good cadets to come to you. We go out, work hard and get the cadets
and we don’t complain [Shipping Company, Interview 5]
This view is in line with that of yet another company manager who explained that he
believed that there is still a lot of seafaring potential and interest which companies could
cultivate. His view was based on the experiences of his company in the process of
recruiting and training cadets during what has come to be termed as the ‘bad years’, the
1970s and 1980s, when cadet training in the UK ground to a stop. He said:
I think there are still a lot of people out there who would like to go to sea.
You will still find a nucleus of interested people out there but I think the
problem is that the profession is not well advertised and promoted…. It is
traditionally promoted and sold as a romantic career involving lots of
travelling and adventure but you will find that much of that is gone and we
need to change our promotion strategy and portray it as a worthwhile,
rewarding professional career; that is what people want [Shipping Company,
Interview 2]
Another company manager explained that, although the level of interest seafaring
attracts, from the youth today, might not be as high as three decades ago, it is not the
case that there is completely no interest:
We always get letters asking for apprenticeship so I think that there are still
many people out there who want to go to sea. It might not be as it used to be
years ago but speaking from our perspective, we do not seem to struggle to
get them [cadets]. It is not a problem that affects us at the moment [Shipping
It is both interesting and revealing to note that the companies which do not seem to
promote the view that seafaring is no longer interesting to the British are those which
have been identified by some agencies, colleges and seafarers’ unions as being actively
committed to training and employing British officers. A senior union official said of
such companies:
A few companies have stuck to a strict training programme over the years,
even in the bad years. What is even better is that the y are committed to
- 164 -
employing British officers…. We know them and we thank them [Union

Interview].
This might be an indication that those companies which truly want to train and employ
are bound to be more enthusiastic and optimistic in their view of the training situation
whereas the rest will often project this bleak image of the situation. It is therefore likely
that this popular misconception is for the implicit convenience of those who do not wish
to continue training and employing British officers. The senior union official summed
this argument as follows:
It is a very convenient but, unfortunately, wishful and infectious thinking on

the part of employers; imagine who would be happy if indeed no British
youth signed up for cadetships… It is a very conve nient argument and it is
meant to justify their lack of commitment to train and employ British
officers [Union Interview]
A particularly strong argument, on the same lines, was presented by one training agency
manager who explained that his company was not facing any difficulties in attracting
people to their cadetships. In his comments, the manager suggested that the problem lies
more in a failure to retain cadets rather than to attract young people into the training
programme:
There is no evidence to suggest that young people are not interested in these
cadetships, I must say that each year we are inundated with applications; we
are receiving an average of 3000 enquiries each year, I don’t see that a sign
that young people are not interested [Training Agency, Interview 21].
This argument was also supported by a few shipping company managers.
Therefore it seems as if the general view of shipping companies and training agencies is
that efforts to increase the numbers of British junior officers are being frustrated by,
among other factors, but mainly, a growing lack of interest in sea careers among the
youth in Britain. Although the majority of these corporate actors hold this view there are
some who do not agree with it. Instead they suggest that the problem lies elsewhere.
Another factor that has been identified by shipping companies and training agencies as
contributing to the failure to increase British junior officers is the average age of
applicants to cadetships in recent years which, they argue, is too young. Most of the
interviewees in this category clearly held the view that seafaring is a difficult profession
- 165 -
whose training requires a lot of patience, determination and endurance. One company
manager and ex- mariner explained:
The work of a ships’ officer is not easy; there are many difficulties and
challenges and one should be ready and willing to endure long hours on the
job. This is something that demands both mental and physical capabilities
which most of the cadets nowadays do not seem to have [Shipping
Many therefore argue that the age at which most British cadets commence training, that
is, between 16 and 19, is too young hence; many of them lack the physical capacity, and
the discipline, to successfully complete the programme. One training agency member of
staff explained:
Because of the young age of the cadets, many are unable to cope with the
difficult and demanding training programme, especially at sea but also you
will find that some lack the patience and discipline to study hard and master
some of the difficult subjects of the course [Training Agency, Interview 9]
Considering the average age of my cadet interviewees it was clear to me that the
average age of cadets falls between 16 and 19 but, whether or not this necessarily means
that most of them are physically and intellectually incapable to withstand the training is
debatable and would require a lot more evidence. The shipping companies and their
training agents, however, seem convinced of this and, to further prove their point, they
point to yet another factor, low academic aptitude, which, according to many of them,
contributes significantly to the difficulty in increasing shipping skills in the UK.
Many training agency managers argued that, in addition to the age problem, many of the
candidates who apply into the cadet programme, nowadays, lack the academic
qualifications and general aptitude to successfully complete the course. Their view is
that for one to successfully go through the officer training programme and qualify with
the right level of skills, they must have the ability to handle such subjects as
mathematics, physics, chemistry and geography. Whereas it might be correct to say that
the cadets need the ability to handle these essential subjects, there is no evidence
presented to show that, with proper coaching, the cadets in question cannot muster
sufficient competencies.
The companies and agencies continue to argue that the problem is two-fold. Firstly, they
are being forced, by circumstances created by gove rnment policy, to target school
- 166 -
leavers with lower, specific subject and overall, grades than they normally would
consider, and, secondly, only those school leavers with low grades are targeting
seafaring because they are locked out of university and are considered unsuitable by
other middle- level professional training institutions.
Both the shipping companies and training agencies believe that this has come about as a
result of government policies which are aimed at promoting university education at the
expense of middle level colleges and vocational courses like seafaring. One Manager
explained:
Because of the government’s keenness to get more people to undergo

university degree courses we have very much reduced the number of people
that traditionally might have looked at a sea going career, because you are
looking at group of people that are essentially practical but have a certain
amount of academic talent but are not interested in going away to take a
degree. So, that pool of people that used to be there has shrunk very much
because they are being pushed to take degree courses [Shipping Company,
Interview 25].
A training agency manager also supported this view. He explained that over the past
few years the government had drastically lowered university entry points in order to
make more people go through universities and obtain degree qualifications in pursuit of
the government policy objective that at least 50% of the population should have
university education. As a result, all the other middle and lower level colleges have had
to lower their entry points:
We have lowered our entry qualifications very much because the

government has decided to drastically cut down university entry
points…this is a political thing, just to be seen to be putting more people
through universities, so they have come up with this policy that at least 50%
of the population should have university education. Many of the candidates
we take can hardly cope with the course content, especially the sciences,
which are compulsory for all. We have had a few dropping out as a result. It
makes work harder for us and reduces the quality of the officers we produce
in the country [Training Agency, Interview 21].
The shipping companies’ managers further claimed that they were hard pressed to get
the right numbers of good quality cadets because of the combined effect of reduced
applicants and the prevailing academic aptitude. As noted in the extract below from a
company source:
- 167 -
For example, this year we were requested to train eleven cadets. I was only
able to find nine. Also, those nine cadets were only lower GCSC grade.
Normally, company requirement will be A- level or top GCSC grades. So,
it’s extremely difficult to find suitable candidates. Also the numbers which
are requested [Shipping Company, Interview 10].
It, therefore, seems that there are two parts to the corporate perspective described here;
the first one is that there are not enough people coming in because the career has lost its
appeal to the general British society, and the other is that the British youth of today are
not of a seafaring quality either because of the average age at which they join cadet
training or because of the prevailing academic aptitude of the available applicants.
These two parts to the argument seem like two parallel and contradictory views. One is
that there are no people interested in the career and the other is that there are people but
they are not of the required quality. However, the message that runs through the two is
that the number of people interested in sea careers has decreased drastically such that it
is not easy to get enough cadets to meet shipping companies’ Minimum Training
Obligations. Moreover, the few that are available are not of the right quality which
implies two things: first that many of them will not be able to complete their training
and, second, those who finish are not necessarily good officer quality. Either way, the
companies are arguing that the British source of officers in not reliable both in terms of
numbers and quality, an argument that has been dismissed by training colleges. As we
shall see in the next sub-sections the credibility of this claim is challenged by cadet data.
7.3.2 The Training Colleges Perspective
The training college perspective is interesting because, while it concurs with that of
companies and agencies in relation to age and academic aptitude, it disagrees with the
argument that British people no longer want to go to sea. Most importantly, the training
colleges disagree with the way the corporate industry presents its argument which, one
college staff described as “clearly inaccurate” [College Interview 2].
Primarily, the training administrators in these colleges take the view that there is a
strong interest in sea careers among British youth. One cadet administrator made it clear
that there was no problem with getting cadets:
Numbers wise, in the last three to four years, we have had no problems; we
have done very well [College Interview 2].
- 168 -
Another college staff member reiterated this view and emphasised the point that the UK
still had a lot of seafaring potential and people in many regions still considered
seafaring a good career:
We get as many trainees as we can handle every year so we cannot say that
our training programmes have become less attractive. There are still many
people out there who see seafaring as a good career and lately there are even
more because conditions are improving and it now offers many possibilities
beyond the sea… The majority of the people doing the course come from a
seafaring background or a member of the family is a seafarer … They are
there because they want to be officer of the watch, you can offer them a
degree, master’s certificate but what they are concerned with is that they
want to go to sea, so that is why they are there [College Interview 1].
Concerning the age of cadets, the staff I interviewed, at the various colleges, agreed that
many of the cadets they were receiving in recent years were much younger and
explained that this sometimes created discipline problems because some of them still
carried the ‘high-school mentality’. One of the interviewees explained:
Our biggest problem with the age of the cadets is discipline. First of all you
are talking about students, just out of high-school, some of whom are quite
young…..getting the message across to them that they are now in a
disciplined environment….that is a problem because of the way our
schooling and our education system is, there is not enough discipline; we
expect them to be on time and dressed properly, that can be a big challenge
[College Interview 2]
However, it does not seem as if the age is a big hindrance to the cadets’ training
performance. Nonetheless, a cadet training officer in one of the colleges explained that
in very few cases a cadet might be too young and physically incapable of completing
the course, especially at sea. This interviewee however seemed inclined to think that
such cadets would be able to complete the programme successfully if given the
appropriate support from their sponsors:
Age only becomes a problem when there is no proper support for the cadets.
Some are clearly too young and it shows from their physical build and their
behaviour. In college we can handle the discipline part but out there at sea
some senior officers might not have the patience. These are the ones who
cannot complete the course, it is not such a big problem, I don’t think
Regarding academic aptitude the college staff who participated in the study agreed that
over the years the colleges have been forced to take people with lower school grades
- 169 -
with the consequence that many have difficulties in handling certain aspects of the
academic content in the course, especially, subjects like navigation (for deck cadets),
mathematics and physics which are essential and compulsory for all cadets and
important to the training. One administrator explained:
This is a big problem; many of the cadets simply do not have the academic
capability for the course and it is something that has to be considered
seriously because it makes our work difficult and might, inevitably, affect
the general quality of officers that come out of the system [College
Interview 3].
This quote suggests the possibility that, as a training agency manager quoted earlier said,
government policy has pushed down university entry requirements so much so that
training programmes like seafaring have been forced to take candidates with very low
grades in essential subjects. It does not suggest, however, that nothing can be done to
improve cadets’ abilities in the problem areas of the course content. Clearly, the
interviewee implies that with more effort and hard work, this should not be a problem of
the magnitude implied by some training managers and shipping company executives. It
is therefore possib le to argue that the training programme needs revising so that those
cadets whose competency in certain essential subjects requires improvement can be
supported with extra coaching in order to bring them to up to the appropriate standard.
According to one cadet training officer in one of the colleges, in order to solve this
problem, the college had designed a bridging course meant for those cadets whose
qualifications need upgrading:
For example, to do the HND programme they now need five GCSEs, C
grade and above but if you are looking at C grade maths it is a very low pass
mark and it is not sufficient for them to take on the content of a deck officer
or an engineer training. This is why many of them struggle. So we now have
built in an academic ramp into our course which we have done successfully
but still tutors have to work very hard with students to get them through
some of their course work and exams [College Interview 2].
This indicates that what is required is an overall upgrading of the training programme so
that low schools grades will not be a problem big enough to push cadets out of the
system prematurely.
So, from the data, it appears that colleges are not in agreement with the general
argument presented by the corporate industry to explain the failure in increasing British
- 170 -
junior officers. They particularly do not seem inclined to support the argument that
British youth are not interested in sea careers and, although they agree that there are
challenges arising from the cadets’ young age and low school grades, they do not
consider these fundamental problems. What, then, do they consider to be the main
problem?
The few shipping companies and training agencies that were quoted earlier as opposing
the general corporate ‘lack of interest’ argument suggested that the problem might lie
elsewhere. Indeed, one training agency manager, also quoted earlier, indicated that the
problem lay in retention rather than attraction. The cadet administrators I interviewed in
the various colleges are convinced that this is the case. Many explained that their
colleges were experiencing as much as twenty to 30% wastage rates per cohort. One
such interviewee explained:
We have not failed to bring people in. I don’t think that is where the
problem is: I think that there needs to be measures to ensure greater
retention to ensure that most of the cadets actually complete their training.
At the moment we are, unfortunately losing between 20 and 30% of the
cadets in every cohort. So you see, I don’t think that is the problem at all
Apparently, most of the dropout cases happen when the cadets go to sea for their first
sea training phase after the initial college phase. Some, however, stay on after the first
sea-phase but subsequently drop out either during the second college phase or the
second sea-phase. In any case, the majority of dropout cases happen between the first
and second sea-phases as one cadet administrator explained:
Most of the cadets leave during the first sea-phase. Some come back to
college after the sea-phase and declare that they are quitting or simply don’t
turn up so we only get to know from the companies that they have quit. A
few leave during or immediately after the second sea-phase [College
Interview 1].
Many of the shipping companies and training agencies have used such statistics to
conclude that the high wastage rates are due to the fact that the cadets are either too
young or too ‘soft’ to cope with life at sea. College staff, on the other hand, suggest that,
although some cadets might be too young or too ‘soft’, premature termination of the
course would not occur if the sponsoring companies and their agents established
effective follow- up and support systems for their cadets to provide them with necessary
help and encouragement. The training officer of one college said:
- 171 -
Yes, many of them drop out in their first sea-time. It is possible that they
find sea- life different and perhaps more difficult than the life they are used
to, but, I think, this could be solved if sponsors took more care of their
cadets, take pains to break them in gently, if you see what I mean….. We
get reports from students about training officers who are impatient and treat
the cadets badly and of poor working conditions on some of the ships, this
does not help at all [College Interview 2].
Some of the areas that college cadet administrators think need attention in order to
improve cadet retention rates include: careful selection of training berths, improved
training and living conditions on-board ship and establishment of an elaborate support
mechanism to help cadets through the training period.
7.4 The Cadet Perspective: Training Experiences and Implications for

Training
The cadets participating in the study had already dropped out of the programme. The
aim of interviewing them was, therefore, to try and establish their reasons for
terminating their training prematurely. This allows me to critically assess the various
arguments offered by the corporate industry and the training colleges. All the
interviewees were in the age bracket of sixteen to twenty-one and all of them had
dropped out within one year of the interview date. I was also able to establish, through
the interviews, that the majority of them dropped out during their first sea-phase but a
few left in the second sea phase, and that, although, a few of them dropped out due to
personal reasons, the ma jority quit due to reasons related to the nature and conditions of
training.
According to the corporate industry low officer outputs levels are due to a lack of
interest in sea careers in the UK combined with high cadet wastage rates caused by a
lack of capacity, both physical and academic, on the part of cadets. The training
colleges, on the other hand, believe that the problem is caused by a lack of genuine
commitment, on the part of companies, to train UK cadets. In dismissing the corporate
argument that the British are not interested in sea careers, the college staff argued that
many cadets are admitted into the programme, but shipping companies and their
training agents have failed to actively support them during training thereby prompting
many of them to drop out and seek other career alternatives.
- 172 -
After careful analysis of cadet interview data, on why they decided to terminate their
training, I have isolated two broad themes: the first one relates to training experiences,
especially at sea, and their influence on cadets’ decision to quit, and, the second one
relates to cadets’ career anxiety and uncertainty. Both will be dealt with in turn.
7.4.1 Cadet Training Experiences at College
The training of cadets is divided between college and sea time but always begins with a
college phase. The quality of cadets’ experiences during this phase largely depends on
the quality of living and training facilities available in the colleges and the nature of
support that the colleges offer, academically and socially. Most of the cadets I spoke
with expressed satisfaction with their training experiences at college and all of them
thought that the training facilities in their colleges were particularly good. One cadet
explained:
The training facilities in […] are superb, very good, which makes learning
interesting and the lecturers are superb guys. Many are master mariners and
they know their stuff. About facilities in college I have no complaint at all
[Cadet Interview 3]
Some of the facilities praised by the cadets include well equipped libraries, engineering
workshops, modern simulators and classrooms and lecture theatres equipped with
modern communication technology. The cadets felt that the quality and adequacy of the
facilities made the learning process easier and more enjoyable.
With regard to the living experiences the views were mixed. Some found life in college
good while some did not. Careful analysis of the data reveals that a big part of the
reason for this difference in experiences was influenced by the nature the relationship
between cadets and their sponsors and the type of support each cadet received from
them. Some cadets received sufficient support including generous allowances and
continuous emotional support while others were largely left to their own means and
therefore did not have a particularly good living experience. Cadets in the latter
category experienced problems with basic subsistence as one such cadets explained:
The money I got for upkeep was not enough so I had to get cheap
accommodation outside college but still I could not get anything decent and
have enough money left for food and other things. It was tough. Some of the
other cadets were well treated; they got good money for accommodation in
college, books and all and lived well….I think it is just my company that
was mean [Cadet Interview 7]
- 173 -
Another cadet explained:
I honestly think they should increase the money. There is no point

promoting it as a fully sponsored opportunity if we can hardly get by on the
allowance. [Cadet Interview 4]
A few of the cadets I spoke with, on the other hand, expressed satisfaction with their
overall college experience and cited reasonable subsistence allowances and adequate
support and encouragement from their sponsors. One such cadet explained:
My sponsoring company was good to me; I received a lot of support….. It

was three of us with the same company and we had direct telephone contact
with a personnel person in the company itself and we were treated very
well…. [Cadet Interview 6]
There was one particular aspect of college life which many cadets identified as
presenting a problem, that is, difficulties with certain aspects of the course content.
Many cadets, it seems, have difficulties in coping with subjects like Navigation, Physics,
Mathematics and Chemistry. One cadet explained:
Some subjects were very difficult, I found maths and physics very
difficult….. I was never good at these subjects even in school so I found
them quite hard [Cadet Interview 1]
One deck cadet described navigation and ‘charting’ as “nightmare”:
Navigation is very complicated but all deck cadets must be good at it….. I
had to struggle and maybe it is because I am a little slow…. It was a real
nightmare [Cadet Interview 10]
The issue of problems with the course content is one which came up in several
interviews with both training administrators and managers who expressed a general
view that the academic aptitude of the cadets recruited was not up to the required
standard. However, as I have argued earlier in this chapter, it is not clear, from the
colleges and companies’ interview data, whether this is a problem caused by cadets’
academic ineptitude or the structure of the courses and general training standards.
Nonetheless, a few college staff implied that with hard work and appropriate course
structure, most of the weaker cadets can be helped to gain competency and confidence:
In my view many of the problems are just due to lack of confidence. Many
of the lads lack confidence at the beginning but, with time and proper
coaching, many eventually do catch on [College Interview 2]
- 174 -
Ultimately, such issues contribute to a generally poor training experience for many
cadets at college leading to far reaching consequences for the industry as we shall see in
the next section. The overall assessment of the cadets’ views on their experiences at
college, however, indicates that the majority were fairly satisfied with college life as
opposed to life and training at sea which many described as difficult and unpleasant.
7.5.2 Cadet experiences at Sea

The accounts by shipping executives taking part in the study suggest that there have
been great improvements on-board recent ly built merchant ships whic h have improved
the living and working conditions for the crews on-board. However, accounts of
experienced seafarers indicate that newer ships are not necessarily better than older
ships in terms of the facilities and conditions they offer. For example, the much talked
of e-mail and satellite communication facilities on-board modern ships are, in most
cases, only available for the master and senior officers and often for official
communication purposes.
Not all new vessels are equipped with satellite television facilities and where they are
available; the programmes will not always be in a language understandable by all. In
times of increasing work pressure and fatigue (Smith et al, 2006), due to reduced crews
on-board, the television plays an important role as a means of relaxation and recreation
on-board after work. The accounts of many experienced seafarers, many of whom are
now shore-side company managers, revealed that, furthermore, the increasing
sophistication of ships, and shipping in general, has robbed crews of the camaraderie
social atmosphere which characterised life on-board older ships. Ships are now manned
by only a handful of people often from different parts of the world, working under
enormous pressure and only meant to be together for a brief period in most cases (Ellis,
N, 2007).
Moreover, the same age-old and ongoing company quest for lower costs is leading ship-
owners to install smaller accommodation cabins and, generally, poor quality living
facilities. The result is that the improvements often hailed as changing life on-board
ships for the better are largely cosmetic. The manager of one shipping company, a
former captain, wondered:
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How [can] a ship owner, who has spent so many millions of pounds
building a modern ship settle for the cheapest facilities for his crews? It
surely beats me, but they do, all the time [Shipping Company, Interview 13].
It appears, therefore that the living and working conditions for seafarers on-board have
not necessarily become better with newer vessels. On the contrary, because there is
evidence of growing work pressure and increasing fatigue on board modern ships the
importance of having good accommodation and facilities on-board is underwritten
(Smith et al, 2006).
It is into such a high pressure, and often difficult working environment, that cadets are
often suddenly introduced in their first sea training phase. Data from interviews with
training agencies and college staff, discussed earlier, has shown that it is during this sea-
phase that many cadets drop out. Cadet data suggests that many of them find their first
sea-experience unbearable. Furthermore, the training experience at sea is created by a
combination of factors, of which the quality of living and working facilities on-board
are one. Other factors include crew composition, the nature of work, loneliness and
isolation during the long periods away from home and the general suitability of the ship
for training purposes.
One college training administrator, an ex- mariner, observed that many cadets fo und sea
training hard because, “The shipboard environment is basically and primarily a
workplace which no amount of improvement can turn into a home” [College Interview
1]. This, unfortunately, seems to suggest that the general lifestyle on-board ship,
however improved the facilities, will always remain alien to even the longest serving
officer and difficult even for the most enduring person. This however, should not be
taken to mean that nothing can, or should, be done to improve conditions on-board. It
should, on the contrary, be an impetus for ship-owners to try harder to make the lives of
seafarers more comfortable.
Considering the poor living and working conditions on-board some of the ships, the sea
training experiences for cadets, most of who are very young as described previously, are
often unpleasant. It appears, from my interviews with ex-cadets that the first sea phase
is the major test of the ability of one to survive the training. For many, the type of life
they encounter on-board is a total surprise irrespective of how much the college
prepares them. This further confirms the observation by a training administrator that “no
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amount of instruction in college can really prepare the cadets for their first experience of
life at sea” [College Interview 2]. Cadet interviews confirm this because they reveal that
most of the cadets are not prepared for the type of lifestyle they encounter when they
first go to sea. One of them explained:
I knew it would be a tough lifestyle but I also expected it to be a lot of fun,

you know, but it was much too tough [Cadet Interview 7]
With regard to training and living experiences at sea, for cadets, a number of themes
have emerged from my analysis of the cadet data. These themes represent the issues
brought up and identified as contributing to poor sea training experiences for cadets.
They include; inappropriate nature of work, loneliness and isolation, insensitive and
unsupportive behaviour of senior officers on-board and the shore-side management and
a generally difficult lifestyle.
(i) The Nature of Work
One of the main issues raised by the cadets was the nature of work they were expected
to perform while on-board which, many considered difficult and inappropriate. Many of
the cadets seemed to feel that they were being used by the companies as extra labour
rather than trainees. One cadet explained:
It did not feel like training at all on that ship, we were working like slaves…
So I was all the time with the crews doing hard work and receiving no
instruction relevant to my training [Cadet Interview 2].
In an interview with a training company manager, however, such complaints were

dismissed, h/she said that cadets expected to be “in white gloves on deck handing down
instruction to others and looking out of the bridge window since they are training to be
officers” [Training Agency, Interview 21]. Whereas it might be true that some cadets
might go to sea with this notion, it seems unlikely that there were so many of them as to
warrant the kind of generalised and strong views that the manager expressed. One
college cadet administrator explained that although cadets are expected to work hard, as
part of their hands-on training process, they were not to be taken as “extra deck or
engine-room hands to be used and exploited” [College Interview 1]. This, according to
this training administrator, is what many ship-owners put cadets through on-board their
ships at sea. Furthermore, the “white gloves” views of the training manager might
perhaps be an illustration of the type of unsupportive attitude that seems to be emerging
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strongly as a characteristic of some of the sponsoring companies and their training

agents.
It certainly did not appear to me that any of the cadets I interviewed could have joined
with the ‘white glove’ illusion as suggested by the training manager. They might have
been young, and some might have looked physically small, but all of them explained
that, when they went to college and eventually to sea, they knew it would be tough. One
cadet described this as follows:
I expected that I would be assigned to various officers in different sections

at different times to work with, practise skills and be assessed by the
training officer, but no, I was there mainly as part of the crew and did not
know what was going on with my training and when I approached the
training officer about it he got very cross [Cadet Interview 1].
(ii) Lack of care and Support both from Senior Sea Staff and Shore-side Management
The issue of insensitive and unsupportive attitudes from senior officers on-board came
up frequently as one of the main reasons behind cadets’ decision to drop out of training.
Many of the cadets complained about impatient and insensitive officers. One cadet, for
example, described his situation as follows:
I did not enjoy the training, especially at sea… it was hard work and I did
my best but the chief officer kept threatening to send me away…that I was
lazy. When I complained to the training company they just did nothing, not
even respond [Cadet Interview 3]
The cadet interview data confirm that while many cadets are prepared to do hard work,
they are not prepared for the unsupportive training atmosphere in which they find
themselves. The following extract demonstrates this:
Oh no, I went in knowing well what to expect…. I would be stupid to expect

it to be easy. It is just the attitude of my training company and the other
officers on-board that discouraged me [Cadet Interview 7]
The issue of poor relationships between cadets and their training officers came up in a
majority of the interviews. According to one cadet the training officer on his ship
“behaved as if I was an inconvenience on-board if I was not somewhere out of sight
washing and scraping” [Cadet Interview 1].
Perhaps the worst account of this lack of concern for the welfare of cadets came from
one cadet who was forced to quit because the master could not let him take time off to
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be with his fiancé who had just miscarried and the company ashore offered no
assistance in spite of the fact that the cadet appealed for intervention:
I had many problems after I started the training but it was clear to me that
no one cared; my father died while I was away at sea the first time…the
captain complained that I had overstayed when I rejoined the ship… I was
really unfortunate because during the next sea phase I was told that my
girlfriend had miscarried. This time I was told I could not go…when I
complained to the training company they said if I left I should not come
back… [Cadet Interview 9].
Although there were few similarly extreme accounts of insensitivity from sponsoring
and training companies, there were many more descriptions of less serious scenarios
which, cumulatively, indicate a bigger problem with the way these companies relate to
their cadets.
(iii) Loneliness and Isolation
One big problem which cadets face at sea seems to be loneliness and isolation. This
could be partly because, as the data across the board indicates, many of them are young
and have not been exposed to life away from home before. But it could also be because
the conditions under which they have to live and work are stressful and, as much of the
data suggests, because there are not sufficient support mechanisms for those who need it.
Looking at the cadets participating in the study it was clear to me that many were
clearly capable of handling the strain of the long periods away from home while some
could, clearly, only do so with support. Whatever the case, loneliness is a major
problem but one which can be easily solved with support from sponsors, including
constant counselling for those cadets who would benefit from it. One such cadet gave
the following account:
You don’t have anyone to talk with and everybody is busy and you miss
home…. I missed home….everything, my family my friends, everything,
hanging out with my mates….I just missed it all [Cadet Interview 10]
Another cadet explained:
At college it was easier because you make friends and you go out and it is
like home…..but at sea, it is not the same….you can’t really make friends
and it is not the same [Cadet Interview 3].
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This sense of isolation came out very strongly in the account of one cadet who
described how his cousin passed away while he was at sea and, when he came home
after the funeral, he just felt afraid to go back to sea. Although he went back, he decided
to quit soon after because he could not shake off that feeling of dread:
I was not able to get off in time to attend the funeral and when I came home
I just imagined if it had been someone closer to me, say, like a sister, a
brother or a parent [Cadet interview 6].
This is clearly a drop-out case which might have been prevented with proper
counselling and emotional support. As the cadet put it himself:
There was no other problem about the training which I cold not handle.
After my cousin’s death I just felt too far away from home [Cadet Interview
6].
Seemingly, one main factor which causes this loneliness and a feeling of isolation is the
lack of adequate communication facilities on-board. In some accounts the ships had
telephone and e- mail facilities which the crew and the cadets could use to communicate
home. In most cases, however, such facilities were only available for official
communication and, for the crew, only in cases of emergency. Many cadets who were
on such ships had no way of communicating with their families which increased their
sense of isolation and enhanced the feeling of loneliness. One cadet explained:
The telephone, you could only use it in emergency cases, not to just talk to
your parents unless in an emergenc y….e- mail as well. They were only for
official communication but if you are friends with the master or chief officer
you might get to make frequent calls home [Cadet Interview 1].
In other cases the loneliness and isolation came out as a sense of frustration arising from
work pressure and lack of shore leave at the ports of call. Many cadets expressed the
constant hope that they would be given some time off to, as one cadet put it, “go into
town, make a phone call or just walk around and get some fresh air” [Cadet Interview 5].
The cadets, however, described situations where, port calls were dreaded because there
was always too much pressure to either finish loading or discharging activities within
the shortest time possible:
The port was probably the worst point because you knew you were in port
but you could not get off the ship….this is where the work was hardest, I
guess, because the clock was ticking…. It would have been a great relief to
go ashore even for an hour or so [Cadet Interview 10].
- 180 -
Loneliness, isolation and work pressure are some of the problems that have been
identified elsewhere as causing depression in many seafarers worldwide (Ellis, 2007;
Kahveci, 2007). It is, therefore, not surprising that cadets should find it even harder to
cope with the pressure at sea.
(iv) Difficult Lifestyle On-Board
Difficulty of lifestyle at sea is a problem that was identified by all cadets although
different cadets had different reasons for finding it so. The majority of them raised
issues related with food, accommodation and recreational facilities as the main reasons
they found life unbearable on-board. One cadet described his ship as “old and run-
down” and described poor living conditions on board:
My first sea-phase was on-board an, old rundown, ship with the worst
conditions, honestly…. The accommodation cabins were few and horrible
and we had to share. There were basically no decent facilities of any sort on
board that ship, no entertainment, no communication, nothing!..... It was
very hard for me [Cadet Interview 1].
Even where cadets were placed on-board relatively new ships, still issues of small
sleeping cabins and a generally uncomfortable atmosphere came up.
However, contrary to popular ‘myth’ that the multinational nature of present-day crews
discourages British cadets, there were no accounts indicating that this was a problem in
spite of the fact that I put this question to my cadet interviewees directly. Apart from a
few accounts of difficulties with language, conflicting cultural perspectives and
practices, there was not much to indicate that cadets were particularly put off by
working with foreign nationals. Certainly there was no indication that it led to cadets
choosing to terminate their training programmes. In fact one cadet described the
multinational composition of the crew as “probably the only good thing on that
ship…makes it all more exciting” [Cadet Interview 1].
Another cadet said:
Most of the people on that ship were from different countries but many
could speak English so language was not a problem and many of them were
really friendly and fun [Cadet Interview 3]
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It seemingly only becomes a problem when the sponsors are not careful with the
process of assigning cadets to ships such that a cadet ends up being the only British, or
indeed, the only English speaking person on-board, as in the case described below:
They put us on an all [foreign] crewed ship and not many of them could
speak English. Initially there were two of us [British cadets] and so I had
someone I could speak with…. It was very difficult to relate to the others
because we just could not understand each other. But the other British cadet
left after a few weeks and so I was all alone and it became very lonely
[Cadet Interview 4].
In another account a cadet found himself as the only English speaking person on-board
a ship with a predominantly Eastern European crew. After complaining he was
transferred to another ship and although he eventually quit, the decision had nothing to
do with that incident. It was rather a combination of many factors which created a bad
experience for him.
Cadet experiences, both at college and at sea, have a big impact on the quality and
quantity of skills produced at the end of the training process. As I have already
indicated earlier in this chapter, there seems to be a large number of cadets who become
discouraged along the way and prematurely drop out to seek other options ashore while
some stay on to the end of the training but one might put a question mark on the
competency of many of those who complete considering how much the general
atmosphere might undermine their confidence in the profession. It is important to note
that the problems discussed above relate to all, if not most of the cadets, including those
who felt well cared for by their sponsoring companies. The difference only lay in the
way such problems were addressed. Whereas some companies and their training agents
took pains to solve cadets’ problems and make them as comfortable as possible, the
majority left them to their own devices. It is the cadets of companies in the latter group
who dropped out the most as confirmed by one training manager:
From my experience here I can tell you that the companies which take good
care of their cadets and consequently experience less incidences of cadet
dropout are those that take good care of their cadets. Cadets require a lot of
support and encouragement because, to be honest, the training is tough,
especially at sea and most of the cadets are very young. Some companies
are willing to give this support but the rest just don’t care [Training Agency,
Interview 11]
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It is therefore fair to conclude that the overall problem is mainly one of lack of support
rather than any of the reasons presented by many shipping companies and training
agencies, which would not lead to increased dropout rates if such support were available
to all cadets.
7.4.3 Employment Prospects
According to the Mckinnon Report “Junior Officers Employment Study” (2006), the
industry, and the government, argues that there is no lack of employment for British
junior officers. However, the evidence from my research indicates diminishing
confidence among cadets about their future career prospects. Many cadets were clearly
anxious about whether or not they were going to get jobs at sea and the data show that
the situation is directly contributing towards high cadet wastage rates in the UK.
Furthermore, the Mckinnon Report, which is based on a questionnaire survey involving
UK based shipping companies, draws its conclusions from company statements of
expectation rather than a solid commitment by companies to employ British junior
officers.
Employment prospects are one of the problems affecting skills development in the UK
and this might happen in four different ways. Firstly, cadets are anxious about their
career prospects after completion of training and, considering all the other factors
discussed earlier, may decide to drop out and seek othe r more promising career options.
Secondly, and less directly, the fact that UK based shipping companies are not
interested in employing British junior officers means that they are not genuinely
interested in training cadets from the UK. This is certainly a major contributing factor to
the deteriorating cadet training experiences since the sponsors are no t keen to actively
support their cadets during training. Thirdly, many years of diminishing employment
opportunities might have created a negative perception towards seafaring which might
discourage many eligible candidates. Finally, if newly qualified officers do not get jobs,
they miss out on the essential post-training experience building opportunities. From my
cadet interview data and data from sponsoring company managers I am in a position to
discuss the first and second possible effects of this phenomenon but I can only comment
on the third and fourth effects deductively since it is outside the general scope of the
study.
- 183 -
Many of the cadets clearly explained that they were uncomfortable with stories about
lack of jobs for British officers. One such cadet was convinced that it would be hard to
get a job because, as he put it, “seafaring jobs are going to foreign people who are
cheaper” [Cadet Interview 3]. Such fear, according to many cadets, was influenced by
media reports and stories from other sources that the profession is becoming a ‘third
world occupation’ (Nautilus-UK Telegraph, 2006; Cargo Security International
Magazine, 2006). The following three extracts clearly show the effect of career anxiety
on cadets:
I started hearing stories from other crews that the company was really bad
and one senior officer….they said the company only employed foreigners,
said I was wasting time if I expected a job with them, he said. I could not
take the risk [Cadet Interview 10].
And
People are talking about lack of jobs and, of course, it is discouraging…. I

did not want to sit around and take chances [Cadet Interview 11]
And
They say that there are no jobs for British officers, not anymore; everybody
is talking about it and it is discouraging….. Companies are employing
foreigners…..they claim that the British want too much money…. Too
expensive….it is very discouraging….better to find something more
promising [Cadet Interview 3]
Many of the cadets taking part in the interviews explained that such fears formed a big
part of the major reasons for their dropping out as the above extracts further show.
Another one concluded much the same by saying:
I thought I would lose other opportunities if I waited around, so I quit and

joined university instead to study engineering. Maybe I will work for a ship
management company when I finish [Cadet Interview 7]
It also seems as if this scepticism about the future is encouraged by some training agents.
These agents made it clear to the cadets, on recruitment, that they could not guarantee
them any jobs with the sponsoring companies at the end of the training. One such cadet
explained:
My company made it very clear from the beginning that there were no job
guarantees…. I stayed on because my aim was to become an officer of the
watch…. I was aware of some of these problems but then all other
- 184 -
professions have their own problems. I was willing to give it a go because I

was interested. [Cadet Interview 2]
Another one added:
No, there were no guarantees but if you are interested in some thing, you go
for it. Sometimes you don’t pause to think all these things but they become
too much when you are in and actually living them, I guess that is what
happened here [Cadet Interview 4].
One might wonder why such cadets choose to take up the cadetships but, it appears that
many do so because of the pay received for training. However, many of them explained
that they held hopes that eventually they would get jobs, if not at sea, then on-shore.
Many saw the programme as a good opportunity for receiving training and acquiring
valuable transferable skills, particularly engineer cadets. As the following extract
suggests:
The good thing about it was that that it was fully paid for opportunity to get
good training, so I didn’t have to worry about loan repayments….. I was not
too worried then; I thought I would eventually get a job, if not at sea then
ashore [Cadet Interview 2]
Unfortunately, as with the issue of limited training support discussed earlier, few of the
cadets were guaranteed jobs by their sponsors. Some of the cadets explained that their
sponsors made it clear that they would give them jobs but, as one such cadet put it “they
made it clear that we would get jobs but depending on performance; only the best
performing cadets would be given jobs” [Cadet Interview 6]. Only a very small number
of the cadets, however, fell in this category. For the majority no jobs were offered and,
seemingly, there were never clear indications of job possibilities on-board the ships of
their sponsors. The following interview from a company HR source shows this clearly:
That is a promise we cannot guarantee to keep and so we do not make the

mistake of giving one. I honestly don’t know of any industry in which
companies promise and guarantee employment to trainees in colleges.
Clearly, this exacerbated cadets’ career anxieties and forced some to reconsider their
decisions to join.
So, the data shows that there is a problem caused by lack of ‘positive support’ and
encouragement for cadets from sponsoring companies. This was clearly demonstrated
by the views of many HR Managers on cadet training and employment which
- 185 -
constituted strong evidence of a reluctance, on the part of UK based shipping companies,

towards employing British junior officers.
The main argument presented by these managers was that British junior officers were
too costly as compared to many other nationalities from low-cost labour supply
countries. Thus, one company source explained that the issue of cost is still a big
problem and that the company could not afford to employ British officers when there
was a cheaper and equally suitable supply elsewhere:
I don’t need to tell you that we are in business for profit, otherwise what
would be the use… we cannot employ British officers, or any others for that
matter, if it is not profitable for us….cost is still an issue and it would be
plain stupid to employ British simply because we are based in the UK when
we can do better with many other cheaper sources [Shipping Company,
Interview 16]
There are three main consequences of this lack of employment opportunities for
qualified junior officers on-board British ships: firstly, it is a discouraging factor to
prospective candidates for cadetships; secondly, the fact that UK based emp loyers do
not rely on the British officer labour market undermines their commitment to genuinely
underwrite its development in terms of training and thirdly, it has a negative impact on
the confidence of cadets and could ultimately undermine the general competency of
British shipping skills.
Over the years deteriorating employment prospects for British junior officers have
created a bleak image of the seafaring career. In the 1970s and 1980s, when many ship-
owners flagged out and employed foreign crews, many British officers were made
redundant and left jobless. Many of the officers who went through this period still
narrate stories of neglect and abandonment by both the government and the industry.
The following interview extract from such a source shows this clearly:
The seventies and eighties….those were very bad years… we were in very
pessimistic times… I wasn’t offered a job when I qualified and got my
second mate’s certificate…that wasn’t a unique experience, it was
happening all over the UK shipping industry. People were being laid off and
made redundant all over. Some were being sacked and re-employed the
following week under completely different and certainly lower conditions
because their ship had ceased to be British over-night…. I can tell you this, I
wouldn’t encourage my son or anybody I know to join seafaring, and it is
just not worth it with all the indifference you see around from both the
government and the industry [Shipping Company, Interview 2].
- 186 -
It is such accounts which have shaped the view that the seafaring career is not
rewarding such that although a lot of ground has been gained in terms of creating
awareness and calling people to sea, the overall response is still much lower than would
be expected twenty years ago. As noted by one training manager:
We are now getting many more applicants but I must say that there is still
less enthusiasm among young eligible British people than, say, twenty to
twenty-five years ago [Training Agency, Interview 21].
Many of the cadets I interviewed expressed lack of confidence in the system and feared
that they would not get employment after training, and this is perhaps a good indication
of the discouraging effect poor employment prospects have on young people as they
contemplate taking up training for sea careers.
With regard to undermining companies’ motivation and commitment to train British

cadets, the data here show that because companies are not interested in employing
British junior officers they lack the essential economic motivation to invest in their
training. This is in line with the basic economic reasoning which dictates that the level
of an industry’s motivation to develop a certain labour segment is directly proportional
to its economic interest and expectation of profit from that particular segment. The
following interview extract from a company source best illustrates this connection, or
lack of it:
…. since we stopped relying on British officers, the whole training thing

does not mean very much to us. We train because we have to under the
minimum training commitment to be honest. If British officers formed a
major part of our labour force then it would mean something but it doesn’t.
This might sound arrogant but that is the way it is; it is the reality on the
ground [Shipping Company, Interview 17].
This approach has a great bearing on both the training and the overall output because, as
I have suggested in previous sections of the chapter, poor employment prospects can
discourage prospective candidates but, perhaps more importantly, it also leads to high
drop-out rates as a result of companies’ lack of motivation to train, considering that they
are not interested in British junior officers. This has a direct and immediate impact on
how cadets experience their training.
- 187 -
7.5 Structural Failures

According to the government and its maritime training agencies, all the tonnage tax
companies are engaged in cadet training. What does this mean however in terms of
actually producing qualified junior officers? Does this say anything about their actual
commitment to training? Evidence shows that the annual drop-out rate, in cadet training
institutions, is very high at 8% (BIMCO/ISF, 2005). The college administrators
participating in the study quoted a figure of between twenty to 30% annual cohort
dropout rate. Such evidence indicates a big problem with cadet retention. Steps towards
improved living and working conditions on-board, creating a friendly and productive
training atmosphere for cadet on-board ships and better employment terms could
increase retention rates significantly. Many of the ex-cadets I interviewed mentioned
difficult lifestyle on-board and overall poor training experiences as the main reason for
quitting the training. One explained that:
Cadet: It is really the lifestyle, it is really hard life and it was my first time
so it was very tough. Maybe it is the particular ship that I went on but living
conditions were very poor and communication was by e-mail for which you
had to get the permission of the captain who was not very friendly mo st of
the time….no social amenities of any kind and accommodation facilities
were very bad
Interviewer: Why do you say ‘maybe it was the particular ship’?
Cadet: Some of my friends said that their ships were very good and the
facilities were good. They even had TV and DVDs and gymnasium on-
board [Cadet Interview 6].
The accounts of ex-cadets and training staff in colleges suggest that many cadets drop
out during or soon after the first sea phase. It seems that the sudden change from the
relatively comfortable lifestyle at home and at college with proper accommodation,
good food and friends and family around is traumatic for many of these young people
mainly, sixteen to eighteen years of age.
Another issue which seemingly contributes to cadet attrition is the suitability of many of
the ships that offer training berths. A few of the ex-cadets explained that they found
their training experience on-board frustrating and it seems that this could be partly
because the ship they were allocated to was not suitable. This, as the following quote
will suggest, not only refers to the physical conditions of the ship and the standard of
living facilities but also the temperament of the senior officers in charge of the cadets.
- 188 -
There were many accounts in which cadets had to put up with impatient and intolerant
senior officers. One such cadet explained that he felt like an inconvenience on-board
because of the impatience with which most of the senior officers treated him:
There was two of us, cadets, on-board and almost everybody was impatient
with us. We felt like we were a nuisance and an inconvenience. The worst
of all was our training officer who simply did not have any time for us at
all.......it was a frustrating waste of time and I was not enjoying it so when
we got to the next port, I asked to leave [Cadet Interview 4]
Not all vessels are suitable for training and great care has to be taken to ensure that
cadets are put onboard ships that will give them encouraging first-time sea experiences,
according to one college training officer. Unfortunately, it seems as if, many of the
sponsoring companies do not pay much attention to this. My interviews with cadet
training colleges and training agencies also revealed another problem: only a few
companies have any actual involvement in the process of training. Seemingly, once they
have delegated the training duty to agencies, many do not have any interest at all
beyond the funding, according to the manager of one training agency:
Some of these companies have no interest whatsoever in the cadets they

sponsor. You will be surprised to know how many ever have any contact
with their cadets. Their involvement rarely goes beyond delegation and
cheque-book sponsorship. [Training Agency, Interview 21]
This lack of close contact between sponsoring companies and their cadets could be a
discouraging factor leading to the poor cadet retention rates. The age at which cadets
enter training in the UK is very young; as early as sixteen years. Such young people
require great attention, reassurance and encouragement which, according to the manager
in the quote above, is lacking. One of the ex-cadets I spoke with confirmed this:
Interviewer: In what ways did this [lack of contact with sponsor] affect you
during training?
Cadet: I guess it would have made a difference to know that the sponsoring
company cared and valued me. We knew that (…) was only an agent and we
knew our sponsoring company but never met them and never heard from
them……I guess it is also, you know, discouraging, you know, because
some of the guys were treated very well by their companies. They were paid
well, they were paid visits and encouraged, you know…..it was just
discouraging (Cadet Interview 3)
Because of such issues, some training administrators in both training agencies and
colleges seem to have reached the conclusion that the commitment of some of the
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companies to train cadets is only as a fulfilment of the requirement for entry into the
tonnage tax, as illustrated by the quote below:
Unfortunately the training commitment is no commitment at all. It is simply

a requirement for companies to fulfil so that they may benefit from the
tonnage tax and that is how it is being treated. These companies do not care
about the quality of cadets admitted on their behalf, they do not care
whether or not they complete the course and, unfortunately, many of the
training companies out there do not care much since they are in business and
it does not cost them a penny if a cadet drops out or not [College Interview
1]
This conclusion may not be too far off-the- mark considering that, according to the
nature of company employment policies discussed in chapter six, many of the
companies are not interested in employing from the British pool of junior officers. In
the view of the manager of a training agency I visited, operators are not genuinely
committed to training because they are not interested in the final product, the qualified
junior officers:
If the companies were interested in the final outcome of the training, i.e.
wanted to employ them when they qualify, they would be more
involved…..I can tell you this, the few companies which genuinely train and
want to employ always follow-up. They get involved in the selection and
they monitor the training through college and sea phases. The rest just don’t
care [Training Agency, Interview 9]
A greater part of the issue here might be driven by what was described by government
officials, taking part in the study, as a ‘short-termist’ mentality by many operators,
which means that their recruitment strategies do not focus on any long term labour
agenda. They are happy to reap the ‘here-and- now’ benefits of cheaper labour in one
part of the world while preparing to move to the next area once it is exhausted. This
view was confirmed by the manager of one of the largest recruitment agencies in the
UK who explained that:
Owners are always looking for cheaper labour and are not interested in
long-term investment in any long-term labour source. Once they exhaust
one source they quickly move to the next [Recruitment Agency, Interview 8]
This research and, especially, the data generated with ex-cadets, their colleges and
training agencies, directly challenge the popular industry mantra that the failure to
increase the number of officers in the UK is because seafaring is no longer attractive to
the youth of Britain. Instead the data indicate a much more disturbing problem - poor
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training experiences, disillusionment and failed cadet retention - which is caused by the
discouraging attitude of the majority of UK-based emplo yers and their apparently
negative view towards cadets and the training process.
7.6 Assessment
For the tonnage tax strategy to succeed in its contribution to the recovery of UK
shipping, the commitment to train cadets must be understood not only as a call for
financial support for cadets and their training but also as a commitment by companies to
encourage and care for cadets throughout their training. It should be understood as a
continuing obligation to support and promote a training tradition. It must be a
commitment to positively and continuously underwrite cadet training in the UK. Such
training would involve designing effective marketing and promotion activities to
positively sell sea careers, developing elaborate mechanisms for supporting cadets
through their training which cater for both the material and emotional needs of the
cadets and creating job opportunities for British junior officers on-board British ships.
The data presented in this chapter has shown that shipping companies and their training
agents, and, the training companies do not agree on the explanation for the failure to
increase seafaring skills in the UK. While a majority of the companies argue that the
unwillingness of British youth to go to sea is frustrating their efforts to recruit and train
cadets, the training colleges, as well as some companies and training agencies, are
convinced that there are many young people in the UK who would like to become
seafarers. They insist that companies’ failure to actively support and encourage cadets
during training is the main problem because many cadets who face difficulties and
problems during training are left without support and have no choice but to drop out.
Their argument, therefore, is that the problem hindering seafaring skills development in
the UK is one of high dropout rates rather than a failure to attract people into the
programme.
Perhaps the most overwhelming evidence on this issue is in cadet interview data which
confirms that many cadets are being forced to drop out of training because of the
unsupportive and discouraging attitudes of their sponsors. Though it is not directly
obvious from the data, careful interpretation, leads to the conclusion that diminishing
employment opportunities for British junior officers on-board British ships might be the
main force influencing low training output levels. There seems to be a correlation
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between poor employment opportunities and companies’ unwillingness to genuinely

underwrite cadet training and, by extension, high dropout rates. Companies are not
commercially interested in British junior officers and, it is not necessarily in their best
interest to actively promote their training.
The importance of boosting employment opportunities, as the best way of encouraging

seafarer skills development is clearly acknowledged by both the government and the
unions. This is clearly spelt out in the shipping policy document British Shipping:
Charting a New Course:
…promote the employment and training of British seafarers in order to keep

open a wide range of job opportunities for young people and to maintain the
supply of skills and experience vital to the economy [Charting a New
Course, p.3]
According to the seafarers’ unions the design of the tonnage tax does not show a serious
commitment, by the government, to promote seafaring skills building because there is
not enough emphasis on job creation. One union official argues that:
The government does not really care very much about UK seafarers. If they
had been concerned about seagoing staff, they would have acted a long time
ago [Union Interview]
In their submissions to the House of Commons Sub-Committee on Transport, while

pushing for the introduction of an employment commitment, the unions argued that:
If the legislation is seriously aimed at the increase in UK based seafarers,

there is clearly a case for establishing a method whereby these cadets are
able to secure stable employment within the UK fleet [Employment Link,
2004].
Shipping companies are however, clearly unwilling to enter into any binding
employment commitment because, they argue, British junior officers are too costly to
employ and still remain competitive on the international shipping market. Considering
that any hopes of increasing UK based junior officers are dependent on companies’
willingness to employ them, the important question is: how can the government
convince employers, who clearly have cheaper alternative labour sources, on the
international open market, to start employing more British junior officers whom they
consider too expensive? Chapter eight will attempt to answer this question.
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CHAPTER EIGHT
Assessment; Limitations to the Tonnage Tax Response
Introduction
The purpose of this thesis is to assess the extent to which states retain the capacity to
effectively respond to economic globalisation and mitigate its negative impacts. The
specific focus is the British seafaring labour market where the number of qualified
merchant navy officers has diminished over the past three decades thus affecting the
supply of seafaring skills as well as essential technical skills to the wider shore-side
maritime industry.
The rapid and extensive globalisation of the world economy, in the past four decades,
has had a big impact on states and their capacity to regulate the economic activities of
giant global corporate businesses. This has come about as a result of the
deterritorialisation process driven by multinational businesses and the growing
influence of corporate capital on the politics of national governments. Increasingly, due
to the growing international mobility of corporate capital and finance and the associated
threat of ‘capital flight’, national governments have been forced to adopt policies which
promote free market ideologies and corporate capital interests, often at the expense of
other important social obligations like employment and social welfare, in order to attract
and retain capital investment (Hall, 2003; Harvey, 2005).
The emergence and rapid growth of globalisation and the influence of neoliberal
ideologies has rendered national borders highly porous and opened up national
economies to free market practices and influences (Beck, 2005; Wolf, 2005). As a result
multinational business enterprises have spread their activities world-wide and acquired
immense economic and political influence. A situation has arisen, therefore, where most
national restrictions on the international movement of trade, finance and capital have
been eliminated with the result that the world economy is now largely controlled by few
but very wealthy, highly mobile and powerful business corporations. This has triggered
the argument that the nation state is no longer capable of effectively regulating the
economic activities of global corporate markets. Susan Strange (1996: 4) observes that
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“where states were once the masters of markets, now it is the markets which, on many
crucial issues, are the masters of states”.
The problem for national governments operating within a neoliberal paradigm is that
globalisation presents two constant threats; capital flight and loss of employment.
Capital and labour are both important elements of national economies but under
neoliberal politics, governments have made the case for promoting capital markets over
domestic labour with the argument that it is good for economic growth and that it
eventually leads to employment (see Chomsky, 1999; Harvey, 2005). Furthermore, they
argue that the option of promoting local labour is a difficult one in a free market
economy which fosters free enterprise and encourages businesses to make the most
profitable factor combinations for production (see Chomsky, 1999). They would
therefore argue that to interfere with capital’s global exploitation of cheap labour is to
‘strangle’ free enterprise and undermine economic growth. This follows the
abandonment of the Keynesian approach to economic management through ‘full
employment’ policies, in the 1970s and the adoption of Neoliberal policies of capital
accumulation (Harvey, 2005).
Global corporations have, as a result, managed to exploit cheap labour, world wide, for
profit maximisation, by the enabling free- market policies which have, over the past few
decades, deregulated national labour markets. States have, in addition, introduced
legislation which undermines the bargaining capacity of labour and enhanced the power
of employers. In a highly deregulated market situation like this, the national labour
markets of high-wage countries like Britain have become increasingly prone to decline
as corporations seek cheaper labour elsewhere in the low-wage developing world. The
overall effect has been that wage rates have been kept low worldwide. This argument
essentially suggests that neoliberal governments have actively and intentionally
promoted the free capital market agenda and further enhanced the ‘symbiotic
relationship’ concept that I have alluded to in previous chapters (See chapters two, three
and six). The down-side of the neoliberal paradigm, for states, especially, economically
advanced and high-wage states, is that it has led to a huge decline in the skills base of
many sectors. The question for these states is: having initially committed to
neoliberalism and free markets and entered into this symbiotic relationship with global
capital, how do they respond to this consequent skill erosion?
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The problem is that, over the years, especially, in the last three decades, global
corporate capital has acquired considerable influence over national governments which
they effectively use to guarantee and maintain their position of advantage with regard to
resource exploitation. Furthermore, because of their global mobility, and the uneven
structure of the global economic landscape, their greatest and most effective tool for
controlling state intervention in the market is the threat of capital flight. Any
government that attempts to intervene in the market and apply strict regulation to
corporate activity risks the loss of capital investment.
The shipping industry is a good example of such developments. As a result of the

extensive deregulation of the global shipping labour market and national governments’
anxieties about loss of tonnage, ship-owners have acquired considerable influence with
states which gives them a ‘free-hand’ in the exploitation of global seafaring labour.
Corporate capital in the shipping industry has a particularly high capacity for
‘international flight’ due to the mobile nature of its primary capital assets, ships, and its
labour force. Furthermore, the international structure and organisation of the industry
allows companies to move capital assets to, and set up operations in, any country of
choice with few restrictions from national governments (See chapter three for a full
discussion). Because shipping assets are mobile and cheap labour is readily available on
the seafarers’ global labour market, the process of relocating operations from place to
place is relatively inexpensive, especially when compared with land-based industries.
As a result of this global capital ‘buoyancy’ in the shipping industry and the resultant
threat of tonnage flight, states have engaged in fierce competition with each other, for
the better part of the 20th century, over shares in the international shipping industry.
While emerging maritime nations have worked hard to attract as much of world tonnage
as possible, Traditional Maritime Nations have fought to regain and retain ‘their’ ships.
Unfortunately, as explained in chapter three, the struggle for tonnage has been based
mainly on a strategy of reducing regulations in order to attract tonnage leading to a
situation of overall deregulation (Selkou and Roe, 2004; DeSombre, 2006). In the past
three decades Traditional Maritime Nations have been losing the battle for tonnage
because, despite their efforts to relax regulation, many ship-owners and operators have
preferred to operate under the very lax and less costly regulatory regimes of Flags of
Convenience (Lillie, 2006).
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High rates of corporate tax, stricter labour laws and stronger safety and environmental
protection regulations, enforced by industrialised maritime flag-regimes like the UK,
coupled with increasing competition from companies operating under less regulated and
low-cost Open Registers, have increased ship operation costs and reduced profits.
Consequently, many operators have relocated their assets and operations to Open
Registers leading to a rapid and drastic decline in the shipping industries of Traditional
Maritime Nations (Lillie, 2006; DeSombre, 2006).
One of the main reasons for ship-owners’ and operators’ decisions to flag out was to
have access to cheap crews from labour supply countries in the developing world.
Because operating costs are high and most of the major ship operation cost items are
fixed, operators often look to crewing costs when seeking to cut overall costs. Crewing
costs are seen by many to be easily manipulated by operators via a move from one
source of labour to another (Klikauer, 2003).
Unfortunately in the years before the 1980s, strict crew nationality regulations imposed
by traditional flag-regimes, keen to protect their domestic seafaring labour markets,
meant that the ship-owners could not employ the less costly foreign seafarers available
on the international market without flagging out. By flagging out to open registers,
companies also avoided officer training and employment obligations imposed by their
national governments. Both the training level and employment opportunities for
seafarers in developed countries therefore diminished leading to a rapid and drastic
decline in local seafarer labour markets. Countries like the UK and other Traditional
Maritime Nations of Europe including France, Germany, Denmark and the Netherlands,
therefore, lost both significant quantities of registered shipping tonnage and the ir
seafaring skills base. Furthermore, they subseque ntly found that they had lost the
capacity to effectively enforce environmental regulation protecting their coastal waters
and marine economy because most of their own (beneficially) tonnage, and the largest
percentage of the world fleet, were effectively under the legislative jurisdiction of the
Open Registry regime.
This highly competitive atmosphere between flag-states led to a general deregulation of

the industry (Alderton and Winchester, 2002; Selkou and Roe, 2004; DeSombre, 2006).
Traditional Maritime Nations were forced to abandon their rigid regulatory stance vis-à-
vis shipping labour and capital in order to stop the tonnage ‘haemorrhage’ and the
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related skills decline. Some of the major deregulatory measures that national
governments like the UK introduced included: tax concessions for shipping companies,
elimination of regulations prohibiting, or restricting, the employment of foreign
seafarers by ship-owners and a relaxation of ship registration conditions. Effectively,
these formally strictly ‘closed’ registers took on an increasingly ‘open’ outlook.
That the growing power of corporate capital has greatly undermined the capacity of
national governments to adopt and effectively implement strategies and policies which
are not in their interest is, perhaps, best illustrated by the inadequacy of the UK
government’s response to the decline in the local seafarer labour market. After decades
of decline, the UK government decided to respond with a recovery strategy aimed at
rebuilding both the UK register (in tonnage terms) and seafaring skills. The response
took the form of the UK Tonnage Tax and was introduced in 2000. The tonnage tax is
basically a tax policy initiative which is meant to encourage ship-owners, both British
and others, to register and commercially manage their ships from the UK. In return for
the generous tax concessions ship operators are required to recruit and train UK cadets
or to make a compensatory payment towards training in order to replenish the depleted
pool of qualified UK officers.
The main motivation behind the government’s response and efforts to rebuild the
seafaring labour pool seems to have been the need to replenish diminishing essential
technical skills for the shore-side maritime sector. Operations like, marine surve y,
marine insurance, ports and harbours, marine law and technical ship management,
require people with seafaring skills and experience but the number of such people has
diminished, over the past three decades. The UK shore-side maritime sector is thus
currently facing a shortage of such skills (Brewer, 2007).
According to the government the best way to replenish such skills is through the
increased recruitment and training of UK cadets who, after some years of experience at
sea as officers, are expected to transfer their skills ashore. To this end, ship-owners and
operators must bear direct responsibility as financial sponsors and trainers. In its
response strategy, the government therefore set out to:
1. Stop and reverse the decline in the UK fleet;
2. Stop and reverse the decline in maritime skills, and;

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3. Boost growth in the shore-side maritime cluster of firms.
Unfortunately, although the strategy has succeeded reasonably well in increasing the
UK fleet, it has not been an effective stimulus in increasing the numbers of qualified
British junior officers. As explained earlier, growth in the shore-side cluster was
expected to come as an extension of growth in the fleet. Although there has not been
any study on how much the shore-side cluster has grown, my interviews with
government officials and industry managers indicated that the number of ships managed
from the UK has increased as a result of the requirement that all tonnage tax ships must
be commercially and strategically managed from the UK, thus expanding the sector
significantly. The output of junior officers from UK cadet training programme remains
low and the pool of officers has generally continued to decline in spite of the tonnage
tax strategy (BIMCO/ISF, 2005; Glen, 2006). The possible reasons for this have been
analysed and discussed extensively in chapters six and seven.
The question here, as described in chapter three with regard to the main research
question is : having initially committed themselves to the neoliberal paradigm and
deregulated local seafaring in order to promote free markets and enhance the
competitiveness of global shipping capital, how successfully can governments turn
around and mitigate negative effects of capital flight such as the erosion of local
seafaring and shore-side maritime skills? This chapter presents a data-based assessment
of the themes emerging out of the data analysis in chapters five, six and seven. It
consolidates the narratives developed and addresses the various research questions
guiding the study. The main focus is on the obstacles and possibilities in the process of
state response and it discusses some of the main reasons for the state’s inadequate
response (through the tonnage tax) and explores some possibilities.
8.1 Government Responses to the Globalisation of Shipping

As highlighted above and discussed in chapter three, the main strategy adopted by the
government, to respond to the decline in the shipping industry, was the introduction of
the tonnage tax. All companies operating their ships under the UK tonnage tax are
subjected to a flat rate tax which is not only much lower than the normal corporation tax
but also offers predictability and stability and thus creates an investment friendly
atmosphere for ship-owners. Moreover, it was not only the immediate ships’ earnings
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which would benefit from the tax reductions but all of the company’s businesses
reasonably related to the management and employment of the ships.
Prior to the introduction of the tonnage tax, however, the government had introduced
the SMarT scheme which was meant to increase funding for cadet training. This scheme,
which was introduced in 1998, is divided into five different categories with the
objective of covering all the possible areas in the training process including recruitment,
training and funding of cadet programmes and also covering all possible paths of
seafarer skills development (See chapter five for a detailed description). Another
important initiative introduced prior to the tonnage tax was a scheme through which the
government subsidised some of the national social security contributions and income
tax for British officers employed on deep-sea vessels in order to reduce some of the
companies’ non-wage crewing costs. It was hoped that, as a result of such reduction in
non-wage crewing costs, UK based companies would find it cheaper and therefore
consider employing more British seafarers.
Alongside the Minimum Training Obligation the government, together with the industry,
also introduced the sea vision initiative which was specifically aimed at promoting
seafaring careers to young people in order to increase awareness and encourage more
interest in seafaring careers. In addition, the government also introduced the B.Sc
Nautical sciences and the Foundation degree training paths fo r cadets as a way of
raising the profile of seafaring training and encouraging more people with good school
qualifications to join seafaring (See chapter seven for a more detailed description). All
these initiatives, plus the tonnage tax, form what I have referred to as the tonnage tax
package of initiatives and make-up the government’s response to the decline in UK
shipping.
All the major stakeholders, among them, the government, the corporate industry and the
unions, were concerned about the decline in UK tonnage and welcomed the introduction
of the tax measures to encourage growth. The government was concerned about the
negative impact of the decline on the UK economy while the unions were concerned
about the huge decline in membership due to loss of employment and hoped that
rebuilding the fleet and boosting expansion in the shore-side maritime cluster, through
the reduced corporation tax, would eventually lead to an increase in jobs for British
officers.
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To promote the recovery of seafaring and the general maritime skills base the
government included a training commitment into the tonnage tax with the specific aim
of boosting cadet training activities in the UK and increasing the supply of qualified
junior officers. This was done in recognition of the fact that, for almost two and half
decades, UK shipping companies had stopped training UK cadets. It was therefore
deemed essential to encourage companies to start training again in order to boost
training opportunities for school leavers.
As explained in chapter three, the training commitment, known as the Minimum

Training Obligation is unique. Although many other EU member-states have introduced
variations of the tonnage tax, none of them has got such an element which, in the UK’s
case, binds participating ship-owners into a commitment to train national cadets. It is
tied into the tax incentives offered by the scheme as a condition which must be met by
all those companies who wish to participate in it and benefit from the reduced tax rates.
Under the minimum training commitment ship-owners are required to train at least one
cadet for every fifteen officer positions entered on the ‘manning’ certificate of every
participating vessel. This commitment is strictly implemented by the government and
failure to fulfil the requirement can lead to a company being expelled from the regime
and, possibly, being charged with a criminal offence for defrauding the government
(HMSO, 2000). This is because the government is giving shipping companies big tax
reductions on the understanding that they will undertake to train British cadets. Failure
to train could therefore be construed as defrauding the government. Furthermore, the
government subsidises the companies’ training costs by paying 50% of the total training
costs per cadet. In ‘very exceptional’ circumstances a company is allowed to make a
payment of £550 per cadet position per month instead of undertaking the actual training.
According to government sources these ‘exceptional circumstances’ are very difficult to
meet. This ‘window of opportunity’ was provided in order to make sure that all
participating companies, even single-ship companies which lack sufficient training
capacity in the form of berths, still make some contribution to developing seafaring
skills.
Through the Minimum Training Obligation the government’s intention was to address
two skills problems; declining number of junior officers to work at sea and the decline
in the number of people with seafaring skills and experience to work in the shore-side
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maritime cluster of firms. Following the huge decline in the pool of qualified British
officers between the 1970s and 1990s, a seafaring skills gap had been created whereby
there were no qualified officers to take over the positions of retiring senior officers on-
board British ships. The government wanted to fill this gap by increasing the supply of
qualified British junior officers with the intention that they should quickly rise up the
ship-board ranks and replenish the depleted seafaring skills. Apparently this aim was
driven by the fact that many UK-based shipping companies, as well as some foreign
ones, still preferred to employ officers from OECD countries, but especially British,
because of the added advantage of language, in senior positions on-board their vessels.
Seemingly, the tendency was thought to be a combination of crews from developed and
developing countries such that the senior- most positions are filled with officers from
developed countries and the rest with those from developing countries.
The government’s aim was, therefore, to encourage the growth of the UK pool of
qualified junior officers by encouraging ship-owners and operators to undertake to train
more British cadets and employ more of the qualified junior officers in order to provide
them with the essential experience. However, although the tonnage tax strategy
contained the Minimum Training Obligation, it lacked an essential employment element
which had been identified, in the shipping policy paper, Charting a New Course,
specifically as one of the two most important requirements for the strategy to succeed in
recovering seafaring skills, the other being training. The training commitment was
essential because it would increase the supply of qualified junior officers but an
employment commitment was also important because, having trained the cadets, they
needed jobs in order to gain the experience required to effectively replace the retiring
senior officers at sea and replenish the shore-side maritime skills.
Generally, the government strategy (the SMarT scheme, the sea vision and the degree
training paths introduced) is a demand-side response. It has mainly focussed on
increasing awareness and boosting cadet recruitment but not in boosting employment
opportunities for the junior officers who would come out of the training. This is
somewhat surprising considering that, clearly, the skills problem can be traced to
reduced demand for British officers as a result of ship-owners opting to employ foreign
officers. In the following section I will explore and assess some of the factors which
shaped such a response.
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8.2 What Shaped the Government Response?

As already explained elsewhere in the thesis (See chapters three and five) the design and
adoption of the UK tonnage tax, although involving several interested parties, was
primarily a project of the government. The government’s approach to finding solutions
for the decline in the shipping industry involved a tripartite consultative process
involving the main maritime stakeholders, shipping companie s and the labour unions.
Other parties, like the ports and harbours, were involved but to a lesser extent. This
approach was necessary considering the complexity of the industry and the nature of the
problem itself but it was also a difficult approach because of the divergence of the
interests and limitations of the different stakeholders.
The government’s intention was to stop and reverse the decline, in both tonnage and
skills, and prevent a total collapse of the shipping industry because of its importance to
the national economy. It was essential, in this respect, to attract ship-owners to bring
back their ships into the UK register and to encourage them to locate their management
operations in the UK thus expanding both the registered tonnage and the shore-side
maritime sector. It was also essential to boost growth in the pool of British seafarers so
as to ensure a steady and reliable supply of skills, both at sea and ashore. The main
constraint for the government was its commitment to the neoliberal ideology which
somewhat limited the extent of its response and made the response to both labour and
capital a delicate ‘balancing act’. Clearly, the government did not want to upset ship-
owners because of the importance of capital to the economy while, on the other, it was
aware of its social responsibility to protect and expand the pool of national seafaring
officer labour.
Considering the complex consultative approach that the government used to arrive at its
response strategy, it is no surprise that the final shape of the response was heavily
influenced by the different parties involved. The government was faced with different
and largely conflicting arguments from the unions and companies and it clearly decided
to go for a strategy which it was hoped could address all interests. Nonetheless, the
strategy supported the corporate position on costs.
The government had to take into consideration the unions’ argument about employment
loss, wage issues and working conditions for seafarers. There was a lot of pressure from
seafarers unions, especially NUMAST, for measures which would increase training,
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boost employment and improve the general working conditions of seafarers. Some of
the proposals put forward by the unions included introducing employment legislation
that would make employers provide more employment opportunities for British junior
officers and less for foreigners. Alternatively, they suggested the introduction of
employment subsidies for those companies willing to employ British officers so as to
help cover the extra cost of doing so. Their main argument was that employment was
the missing essential link that would ensure rapid and sustainable growth in the number
of qualified British officers. This argument was largely based on the fact that the huge
decline in the number of UK seafarers was, in the first place, caused by employment
loss. This was an argument whose strength the government could not ignore because, as
explained in chapter six, the government had also arrived at the same conclusion about
the causes of the decline. The unions also further argued that improved employment
prospects for junior officers would raise the professional profile of seafaring and
‘repair’ the negative perception that had been created through the long years of decline
and ensure that seafaring attracts more young people with high academic qualifications.
The companies’ main interest, on the other hand, was a more business and investment
friendly atmosphere to enhance international competitiveness and profitability. They
were, therefore, especially concerned with high seafarer wages and high corporate
taxation and wanted the government to secure their continued freedom to recruit
seafarers from anywhere in the world and also to introduce a more friendly tax system.
Their argument was based on the fact that, because of high rates of taxation at home and
stringent and costly regulations, they were disadvantaged vis-à-vis their competitors
operating under less costly flag-regimes. They therefore called on the government to
introduce measures which would effectively enhance their competitive capacity on the
international shipping market.
Their other argument was about rising crewing costs and the need to reduce and
maintain them at an acceptable level. Some of the proposals in this regard included
government subsidies on cadet training, national insurance contributions for seafarers
and National Social Security contributions. By the late 1990s, when the government
was considering its response strategy, all shipping companies, including those which
had not flagged their vessels out of the UK, were recruiting and employing,
predominantly, foreign crews and they were comfortable with the fact that the
government had, in the 1980s, succumbed to pressure to eliminate all crew nationality
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requirements. The government was therefore under pressure from the companies to
maintain the status as it was, guaranteeing this freedom of companies to employ foreign
seafarers on UK flagged vessels.
The government was aware of the position of the corporate industry but, more
importantly, they were wary of the possibility that in case the companies did not get
their way, they would not bring their business back into the UK. Worse still, ma ny
companies could easily ‘sail away’ to other flags and thus plunge the UK shipping
industry into final collapse. It is against this background of complex conflict of
interests that the government designed and adopted the tonnage tax, as its main strategy
for the recovery of both tonnage and seafaring skills. My interviews with the various
stakeholders, particularly the government and unions, show that this complex setting
heavily influenced the shape of the response with regard to its design and eventual
performance.
The government acknowledged the validity of the arguments from both sides and was
keen on introducing a strategy that could address the issues presented but there were
concerns about how to balance the interests of unions and those of the corporate
industry. A government policy official participating in the study observed:
These are not simple issues, they are complicated…..We have to remember
how many flag regimes there are and think how easy it is for the companies
to simply pack and leave, overnight, … The government has to be very
careful in these matters and ultimately the objective is to protect the
economy [Government Interview].
This observation was made in reaction to the discussion about the unions’ proposals
about introducing legislation to increase employment for British junior officers on-
board UK flagged ships. The government’s concern was that introducing such
legislation would put them on a collision course with the companies and risk another
long decline in registered tonnage from which the country might never recover. As the
official continued to explain:
We have been down this road before, don’t forget that we had such
legislation before and the companies flagged out in massive numbers…..
Now, we have made huge strides towards rectifying the decline and many
owners are coming back…. It is a very delicate issue and people must
understand that if we experience the same decline that we are now emerging
from, it might be the last [Government Interview].
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What this essentially means is that the government was more inclined to respond to the
demands of shipping companies but not those of seafarer unions. This is clearly evident
from the design of the tonnage tax which offers enormous tax concessions for ship-
owners but does nothing towards boosting employment for UK junior officers. The
tonnage tax, therefore, comes in a design that raises many important questions about
globalisation, neoliberalism and state interve ntion in economic management, especially
with regard to protecting local labour. The structure of the tonnage tax suggests caution,
on the part of the state, and reveals a bias, in government thinking, towards corporate
capital and therefore illustrates the immense influence of capital over the state that I
have referred to earlier in the thesis.
A close examination of the training obligation, which is the only element included for
the benefit of seafarers, shows that even this was designed in such a way that it did not
‘hurt’ capital interests. In the first place, companies are not expected to ‘shoulder’ the
entire training burden because the government bears half of the cost. Secondly, the
benefits that the companies get from the tax reductions offered by the strategy are so
great that paying for half of the training obligation is no sacrifice at all. One company
HR Manager said:
Obviously the tax savings very much outweigh the cost of training
otherwise it will not be worth it commercially. We budget for the number of
cadets that we require and obviously the saving are there. The tonnage tax is
very generous to companies which is a good thing because we can now
compete [Shipping Company, Interview 14]
Another manager explained, on the same issue:
You only have to look at the overall expenses of training and don’t forget
that the government is paying almost half and the remaining is paid by the
company so the financial burden is not very heavy. You really need to look
at the figures; our company saved (£…) in 2005 on tax savings compared to
the normal tax which we would pay so it is not too much to ask the
companies to invest just a little of these huge tax savings into cadet training
Furthermore, the need for more cadet training was presented in such a way as to
strongly suggest that, in the long-run, it would be to the benefit of the companies
because of the rising demand for people with seafaring skills to work in various
technical positions ashore including technical ship managers, marine superintendents
and ISM managers. The whole strategy was therefore packaged in such a way that it
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appealed to and gave maximum benefit to the companies and very little of substance to
the UK pool of seafarers.
Another important influence in the government response was the EU. It is important to
understand that, although the tonnage tax was a national tool for combating the decline
in the UK shipping industry, it had to fit in with the wider regional policy on the
recovery of EU shipping. The UK tonnage tax, as I already explained in chapter three, is
just one national adaptation of an EU strategy recommended by the European
Commission (EC) for the harmonization of the attempts, by member-states, to rebuild
their domestic shipping industries. Although individual states were given the freedom to
adopt the strategy to their local circumstances, all measures introduced had to be
approved by the EC.
One area that the government would have been particularly cautious in was the
introduction of any additional subsidies because of the strict rules introduced by the EU
to govern the amount of financial support an individual private sector can receive from
the government, the EU State Aid Guidelines (Haralambides, 2006). In order to
introduce the tax measure in the tonnage tax, for example, the government had to seek
express approval from the EC:
The need to permit a low tax environment in the form of tonnage tax to help
the European shipping industry be more competitive has been clearly
endorsed by the European Union in its Maritime State Aid guidelines. The
maritime transport industry is considered a special sector for the
consideration of state aid [Alexander Report, p. 14]
Therefore, while the tax reductions offered by the tonnage tax are provided for in EU
State Aide Policy as a way of encouraging growth in EU fleets, introducing
employment legislation to restrict, in anyway, the nationality of crews working on-
board UK ships, or providing subsidies to UK shipping companies in order to employ
British officers, would distort the employment market even within the EU. Therefore,
even if the UK government had been in a position to introduce such measures, there
would have been wider regional restrictions. A government policy official explained:
The government operates within a regional policy framework and any

measures we introduce must be in line with this wider framework. The
tonnage tax, for example, is approved by the EC and the training
commitment is within the wider EU skills development agenda. Introducing
nationality restrictions for crews on UK ships would however be difficult
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because it would mean that even officers from other EU states are
excluded…. It is hard… even if we wanted to take that route which…. as I
said earlier… is very complicated [Government Interview].
The design of the strategy, as discussed in chapter three and five, therefore strongly
suggests that the government was faced with many different interests and many
arguments and that the attempt to sort them out led to the design of a strategy which
takes on a particular shape. As explained earlier, it is a strategy which is heavily biased
towards capital interests. Furthermore, nothing in the entire process of designing it, as
described in chapters three and five, suggests that the government was genuinely
committed to increasing the number of merchant navy officers. Considering that in
chapter six governme nt officials were quoted as expressing doubt in the likelihood of
effectively rebuilding the pool of seagoing officers, there is a strong indication that the
government was aware of the enormity of the international competition for the supply of
officers and the apparent futility of trying to turn the tide of globalization in the
seafarers’ labour market.
There is, however, one more interesting deduction from the analysis in chapters two and
five which indicates the immense influence of the companies on the final shape of the
strategy. Their influence was such that even the unions were in no position to exert
significant force on the government in order to achieve their objective of creating more
employment opportunity for UK junior officers on-board UK ships. The unions were,
clearly, wary of the devastating consequences of a possible massive wave of ‘flagging
out’ as a result of the imposition of the kind of employment legislation that would
achieve this objective. They saw the danger of a further reductio n in the few remaining
jobs for their members and, by extension, a further, and possibly, a final blow to their
capacity. This could explain why, although there were two major arguments that the
government had to take into account, it is the companies’ argument which finally
prevailed and defined the shape of the government response.
The data therefore indicate that the tonnage tax was the product of a delicate negotiation
between governments, the unions and shipping companies, and, one whose design was
also heavily influenced by EU regulation. In the end, it seems to have addressed the
interests of the companies but not fully taken on those of labour and the unions. The
important point here, and one in which the shape of the tonnage tax illustrates the
powerful influence of global capital on national policies, is that both the government
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and the unions were overwhelmed by shipping corporate companies because of the fear
of tonnage flight. As much as the government might have wished to address the issues
raised by unions and protect seafaring labour, it was not willing to upset capital interests,
by pushing through strict employment legislation which might have triggered a renewal
of flagging-out and further tonnage ‘haemorrhage’. Furthermore, the assessment
strongly suggests that, having committed to the neoliberal paradigm and promoted free
capital markets to the extent that global capital wielded such immense powers, the
government was unable to break free of this commitment or deliver half- fulfilment of its
neoliberal bargain with capital (See Hall, 2003).
8.3 The Effectiveness of the Response

As a result of the complex setting described above and the resulting nature and shape of
the strategy, its adequacy and/or effectiveness is debatable and whether or not it has
succeeded largely depends on perspective. On one hand, the number of UK registered
ships has increased from GT 5,531,986 in 2000 to GT 12,149,988 in 2006 (Lloyd’s
Register – Fairplay: World Fleet Statistics, 2006) as a result of improved investment
and tax conditions due to the tonnage tax. The corporate community is therefore likely
to say that the strategy has been successful. On the other hand, however, the output of
qualified junior officers from UK cadet colleges has not improved and this is in spite of
an apparently significant increase in cadet intake levels since the introduction of the
tonnage tax; cadet intake rose from 450 in 2000 to 630 in 2006 but this translated into a
dismal increase in training levels with an increase in the number of cadets in training
from 981 to 1090 (Glen, 2006) within the same period.
The government’s original projection for the increase in cadet intake levels was between
1000 and 1200 in 2005. This figure was the one suggested by the University of Wales
Cardiff study of 1996 as being the intake level required to maintain the minimum skills
level (Gardner and Pettit, 1996). A subsequent follow-up study by the same university,
however, lowered this figure to around 700 cadets (Gardner et al, 2004). The combined
force of the Minimum Training Obligation and the other initiatives like SMarT and Sea
Vision have certainly led to a significant increase in cadet intake levels as illustrated by
the figures described above. The fact that this increase in intake has not trans lated into
an increased supply of qualified junior officers, however, raises one important question:
Is it that the strategy is ineffective or simply inadequate in its design?
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What the evidence clearly shows is that, the popular industry mantra that young people
in the UK are no longer interested in seafaring careers is not correct. It shows that there
is still a lot of seafaring potential in many parts of the UK which, with the right
publicity and positive promotion, could be cultivated and developed leading to a full
recovery of the British pool of officers.
Unfortunately, the data analysis in chapters six and seven suggest a weakness in the
design of the strategy; the fact that it contains only a training commitment but excludes
an employment element makes it inherently weak. The discussion in these chapters
indicates that, for the strategy to succeed, it needed to have both elements. Increased
employment would not only restore the society’s faith in the profession as valuable and
suitable for the British people but also, and more importantly, provide the essential
motivation for companies to train UK cadets thus giving the training commitment
practical meaning for ship-owners.
Chapters six and seven have identified a problem of cadet wastage whereby many
cadets withdraw from the training programme prematurely during, or soon after their
first sea phase. The analysis strongly suggests that these cadets are in effect forced to
quit because of poor training experiences, especially at sea. Furthermore, chapter seven
revealed strong evidence to suggest a strong link between the fact that UK-based
employers are not interested in British junior officers and the poor training experiences.
The data suggest that at the moment many ship-owners and operators, who are the main
training sponsors, do not have the motivation and do not see any meaning in training
UK cadets because they do not rely on the UK supply of junior officers. For this reason,
they have failed to put in place an elaborate support mechanism to provide both
emotional and material support for some of the vulnerable cadets during their training.
They have also failed to create conducive and cadet friendly on-board training
conditions. Consequently the increase in intake is seriously undermined by high cadet
dropout rates which reduce the output of qualified junior officers.
Considering that one of the important conclusions from the data analysis, as indicated
above, was that there are many young people still interested in working at sea as officers,
the message from this assessment is that the government has failed to effectively exploit
the seafaring potential within the country. The key to effectively exploiting this
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potential is increased employment for British junior officers and, although it might not
have been obvious that failure to provide employment opportunities would lead to poor
training experiences, the government, nevertheless was aware of the fact that effective
development of seafaring and maritime skills could only be achieved if UK-based ship-
owners increased employment opportunities for UK officers. It would have been
reasonably obvious, to the policy makers involved in the design of the strategy, that
increasing training opportunities without finding ways of absorbing the qualified
officers would only perpetuate the negative impression created by the long decline.
8.4 Possibilities of a more Effective Response.

As I have indicated earlier, the data strongly suggest that the main problem with the
government response is inadequacy in design rather than ineffectiveness. There is no
problem with the implementation of the tonnage tax because, so far, it is achieving
those objectives that it can be reasonably expected to achieve, that is, an increase in UK
registered tonnage and increased cadet intake levels. What it has not done and can not
be expected to do is increase job opportunities for British junior officers because,
clearly, it was not designed to achieve this goal. However, interviews with government
officials reveal that the government hoped that, by boosting growth in the number of
ships registered in the UK, the number of UK-based employers would increase and that
this would have a knock on effect on UK officer recruitment. This, coupled with an
increased supply of qualified junior officers, as a result of the training element, would,
hopefully, lead to better employment prospects for British seafarers.
This was a very ‘loose’ anticipation because the essential link between increased
tonnage and increased training, on one hand, and employment, on the other, could not
be realised. The strategy fails to give the companies any incentive to employ British
officers because, while they might opt to register their vessels in the UK, they have no
obligation to employ British seafarers. Moreover, companies find foreign seafarers
much cheaper and therefore cost effective. The strategy therefore provided no incentive,
no motivation and no compulsion to employ seafarers from the UK.
Increasing employment opportunities for British junior officers was important because,
as I have mentio ned earlier, once UK-based ship-owners started to rely on British junior
officers, they would have a strong incentive to train UK cadets and would, therefore, put
in place structures and mechanisms to ensure that their cadets received the best training
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because they would employ them afterwards. It would also mean that they created a
training atmosphere, both in college and at sea, which would be both conducive and
productive so as to encourage more cadets to complete the training programme and join
the officer ranks at sea. An employment link was therefore required to provide the
essential missing piece in the tonnage tax in order to make the training commitment
more meaningful and effective.
It seems to me that, in developing the case for a stronger state response that would
effectively address the problem of declining seafaring skills, the government needed to
introduce more radical measures. The aim of such measures would be to make
companies employ more British junior officers. To this end, there are two options that
the government could have pursued but each would mean either breaking away from the
neoliberal commitment or moving against the EU state aid requirements. The first
option would have been to introduce strict employment legislation to force UK-based
shipping companies to cut down on employing foreigners and begin employing more
British junior officers. The second one was to introduce employment subsidies to
provide the companies with a cushion for the increased cost burden they would have to
incur for employing the more expensive British officers.
With regard to the first option, there are three obvious problems for the government.
First, the companies were taking advantage of cheaper foreign labour world-wide and
making profits and did not want to change the status quo. Second, they had the power
and freedom to relocate to any other country, if need be, to maintain the status quo.
Third, the government had tried imposing restrictions on the employment of foreign
crews on-board British ships before, in the form of crew nationality restrictions, and
witnessed a worsening decline in tonnage and would not be willing to go down the same
route. From the interview data collected from government sources it is clear that this is
not a route that the government was willing to take. Having abandoned the ‘full
employment’ approach to economic development since the 1970s, it would take a
complete overhaul of the economic paradigm in order to break free from the neoliberal
commitment. Unfortunately, in this era of economic globalisation, the UK is not an
‘economic island’ and can not simply decide to break away from the neoliberal
paradigm without devastating economic consequences. The government was in no
doubt about ho w the companies would respond to legislation restricting crew nationality.
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The other alternative of subsidising the employment of British junior officers on-board
UK ships presents a number of complications and the analysis in chapters five, six and
seven indicates three possible reasons why the government did not go down that route.
First the government was concerned about budgetary constraints and public policy
considerations and second, the government’s ability to offer such subsidies was limited
under the EU anti-competitions laws and the State Aid Guidelines. Thirdly, such
subsidies would be break with the neoliberal project which government had nurtured
over many decades.
The shipping industry is just one among many in the UK experiencing decline. As I
have already pointed out earlier on in chapters two and three, a number of sectors are
experiencing decline due to capital flight, notably, the manufacturing sector, in part as a
result of job export and off- shoring. Public policy on support for ailing industries in
such sectors demands that support measures be reasonable and well justified. The
benefits of such support, to the British economy and society, must be sufficient enough
to justify the support or outweigh the cost (Haralambides, 2006).
Although the government considers shipping an essential industry for the UK economy
(DETR, 1998), any support measures to individual shipping companies must be well
justified and this is why the government insists that:
… the amount of support an industry asks for and expects to receive must be
reasonable and delicately assessed [Government Interview].
Considering the number of industries in need of support, the government argues that the
shipping industry has been in receipt of enormous state subsidies, for a long time. Ship-
owners in the UK have been in receipt of tax related incentives meant to enhance their
international competitive capacity, investment incentives to encourage shipbuilding,
ship depreciation allowances, seafarer training support and support for research and
development in the industry (Brownrigg et al, 2001; Marlow, 2002; Joon, 2002).
Seemingly, the challenge that the state faces in formulating its support policy is that,
first, such support should not be seen to favour one sector more than others and, second,
given that it operates within a neoliberal agenda, it should not unduly distort the
principles of free competition and free markets. As much as shipping is viewed as
essential and deserving such support, therefore, according to a government official:
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… other industries could argue that the economy can as well still thrive
relying on non-UK ships and seafarers [Government Interview].
Even the argument for the strategic importance of the merchant navy in times of war,
which the government often presents, does not seem enough to justify more radical
government responses. It seems to me that, if the commercial importance of shipping
did not justify special treatment, the strategic and defence argument might have been
sufficient justification for the government to introduce whatever measures necessary to
ensure that the pool of qualified merchant navy officers is rebuilt. The fact that this did
not happen shows the extent to which the government’s capacity to respond effectively
is limited.
The support for cadet training, in contrast, is relatively easy to justify because it falls
under the government’s general programme for manpower and skills development
which is geared towards enhancing skills in various sectors and industries (Leitch
Review of Skills, 2006). However, as my interviews with policy officials reveal, the
government is reluctant to extend this support for skills development as far as
supporting employment through subsidies. A government source explained:
What justification is there for the government to use public money to pay
ship-owners to employ British officers if it can not do the same in all other
sectors? Soon car companies will demand the same, and the service sector
and the manufacturing sector, and then we will have created a monster
[Government Interview].
Another constraining factor is the limited nature of government resources vis-à-vis the
unlimited demand.
This is something that the government has to contend with while designing its policies
for ‘positive measures’, namely support for declining industries and optimising the
distribution of limited resources amongst a growing amount of budgetary demands. The
government finds it difficult to introduce employment subsidies because as one policy
official explained:
The budget is overstretched and has been for a long time now. It is difficult
to meet all the financial demands on the treasury from all the departments.
The government can therefore not pledge to the industry, any industry for
that matter, more than it can afford to give. Delicate balancing and
prioritisation is called for and those calling for the subsidisation of officer
employment must understand this [Government Interview]
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Their argument is that this is a period of squeezed government spending during which
the government cannot afford any more financial support for the industry because, apart
from the lack of funds:
There is no rational justification for paying companies to employ UK

officers when the government is already incurring huge expenses in support
of training for the industry on top of all the tax and investment related
support that they already get [Government Interview].
Considering that the UK is operating within a neoliberal economic paradigm, this

argument about ‘no rational justification’ is understandable considering the commitment
to promote free competition and free markets. The argument ties in with yet another of
the factors restricting government response in this direction; the EU State Aid
Guidelines and the rules on anti-competitive practices as set out in the treaty of Rome.
These rules have been introduced in recognition of the fact that the consequence of state
subsidies is distortion of free markets and therefore strictly regulate the amount of
support that a government can give to private companies (Haralambides, 2006). The tax
measures introduced for shipping companies, under the tonnage tax, were, however,
approved by the EC (DETR, 1998) because they were in line with the EU’s policy for
the recovery of the EU shipping.
To introduce employment subsidies, just in the UK, would give British officers ‘unfair’
advantage over, officers, in the rest of the EU member countries which would lead to
market distortion. In the absence of all the other obstacles, the only way employment
subsidies can be successfully introduced is if European Commission included them as
an EU policy for skills development so that all member states can introduce the same.
Unfortunately it is unlikely that the other obstacles, such as budgetary constraints within
individual states and public policy issues, will be easily overcome. The same argument
can be made for employment legislation. It is not just the state’s commitment to the
neoliberal paradigm that limits the government’s ‘hand’ in this direction. As the
government official quoted earlier explained, there are regional policy considerations
involved; it would be against the general EU commitment to free movement and
participation of labour within the region if individual states introduced legislation that
would effectively lock out other EU nationals from participation in their local shipping
job market. A possible radical step would have been to break away from this EU
regulatory framework and proceed to introduce subsidies but the fact that the
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government did not do this makes a strong statement about its commitment to regional
economic integration and the impact of such commitment on the national policy
framework.
This assessment strongly indicates a situation whereby the government’s ‘hands’ are
tied and its options are greatly limited, so that there is no possible way that the pool of
qualified merchant navy officers can be recovered because, clearly, the government is
unable to break its neoliberal commitments or unwilling to challenge the ‘threat of
tonnage flight’. At the same time, however, the state is also bound by its commitment to
regional integration and must therefore operate within the EU policy framework.
There are, therefore, no easy answers on how the response could have been more
effective, if at all. The Minimum Training Obligation was an inadequate ‘half- measure’
which could not address the problem from all necessary angles, that is, the demand and
supply angles. The forces against the kind of response which would effectively address
the problems and increase the supply of junior officers are many and complex. Mainly,
however, the ability of the state to effectively respond is, clearly, limited because of the
international nature of the problem and the localised scope of the strategy. This does not
necessarily mean that the state is unable to respond or that it has no options, it only
points to a complex question of choice. To return to Beck’s (2005) argument, how
effective the state is in managing globalisation and its associated econo mic and social
implication on local labour depends on the choices that the state makes. In the case of
the response via the tonnage tax the state clearly chose to give more consideration to the
plight of ‘tonnage flight’ than the loss of national seafarer labour. An effective solution
to the problem facing UK shipping labour (as, indeed, many other industries) would
mean a conscious choice to reassess state commitment to neoliberal project and a break
with cross-border EU policy commitments on state aid guidelines. However, both these
options, in the current highly globalised economic setting, are difficult as explained in
the next, conclusion chapter.
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CHAPTER NINE
Conclusions
In this thesis I have explored and tried to understand the role of the state in the
management of domestic economies within the currently highly globalised context. The
aim has been to assess the effectiveness of the state in respond ing to the growing
influence of global corporate capital within a neoliberal paradigm and to determine
whether or not national governments retain their capacity as relevant actors in the
management of domestic economies for the benefit of local industries in the new
globalised economic order. Most importantly, I wanted to understand whether states are
able to effectively protect local labour from the erosive impact of globalisation and
corporate exploitation.
Using the highly globalised, complex and dynamic, shipping industry, as an example, I
have highlighted and discussed some of the negative impacts of globalisation on local
labour markets and tried to address the question of whether national governments have
an adequate answer to the challenges presented by globalisation. Shipping is an
appropriate industry to study in this regard because, as Lillie (2006:4) has observed, it is
“the archetype of unbridled free- market capitalism”. It is one of those industries whose
companies have effectively broken through state economic barriers and attained an
unequalled level of ‘footlooseness’ in their transborder economic activities. It is also an
important example because, in no other industry is labour as internationally organised as
shipping. It is for this reason that the extent of globalisation in the shipping industry is
unequalled by any other. It therefore presents a good illustration of the impact of
globalisation on states and the ir response to its impacts on domestic economies.
Specifically, UK shipping provides an excellent illustration in this assessment because

of a number of reasons. First, as one of the major Traditional Maritime Nations of
Europe, Britain has a long history of shipping and seafaring. It has a history of
commanding a large trading fleet for many years and maintaining an equally large and
highly qualified merchant navy labour force. Second, the UK shipping industry,
including both the fleet and the seafaring labour force, went through a period of drastic
and steady decline between the mid-1970s and late 1990s which left behind a depleted
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merchant fleet and a shrunken pool of seafarers. Third, as one of the countries that have
actively cultivated and promoted neoliberal economic politics and the concept of free
capital markets, it is both interesting and revealing to examine its response to the
growing strength and influence of global corporate capital and assess the adequacy and
effectiveness of its attempt to protect local seafarer labour from decline.
This concluding chapter applies the findings of the study to try and answer the umbrella
research question introduced in chapter one, relating to the capacity of the state as an
important actor in economic management in the era of globalisation, from the following
specific angles:
(i) The paradox presented by the strategy’s effectiveness in addressing capital

decline and the failure on the side of seafaring labour.
(ii) The ability of the state to design effective demand-side strategies within a
neoliberal paradigm.
The general conclusion arising from the assessment of the adequacy of UK tonnage tax
as the state’s main response strategy is that whereas governments are able to promote
and enhance the interests of global corporate capital, their capacity to protect and
promote local labour is highly limited by their commitment to neoliberalism and the
concept of free markets. As explained in the next section, the British government finds
itself in a dilemma with regard to protecting the local seafarer labour by making UK-
based shipping companies commit to mandatory employment for junior officers. The
reason for this dilemma is that whilst they want to stimulate seafarer employment and
protect the maritime skills base, they are fearful of capital flight on the one hand and
opposed to state subsidy on the other. As noted in chapter two, the problem of declining
labour markets as a result of companies seeking cheaper sources of production factors is
not unique to the maritime sector. Labour in many other sectors including
manufacturing and banking has faced similar problems over the past three decades
(Chomsky, 1999; Turok and Edge, 1999). Governments ha ve allowed this as part of a
wider neoliberal project in the believe that encouraging growth and expansion in the
corporate sector and increasing capital accumulation, through liberalisation and free
market policies, will lead to increased economic growth (see Chomsky, 1999; Jessop,
2002; Harvey, 2005; Clarke et al, 2006; Fairbrother and Rainnie, 2006).
- 217 -
9.1 Ambiguities and Complexities in the State’s Neoliberal

Commitment
This thesis has demonstrated that the state is unable to design and implement demand-
side strategies, partly because of its commitment to the neoliberal economic paradigm
and partly because of the fear of capital flight. A review of the literature, in chapter two,
and the subsequent assessment of the data, in chapter eight, demonstrates that since the
late 1970s, the UK government has actively promoted the neoliberal project and
supported the growth of a free global capital market. Consequently, the government is
in a dilemma with regard to responding to, and dealing with, the negative impact of
unregulated capital markets, on local seafaring labour. The shape of the UK tonnage tax,
and the fact that it contains a training commitment but omits the employment element,
is testimony to this dilemma. In the White Paper, Charting a New Course, the
government clearly recognises the necessity of increasing employment opportunities for
British junior officers, on-board UK ships, in order to encourage cadet retention and
thus increase the number of qualified junior officers in the UK.
One way that the government could have achieved an increase in officer numbers was
through the introduction of employment legislation which could have forced UK-based
ship-owners and operators to employ more British junior officers and fewer foreigners.
The othe r was to introduce employment subsidies, whereby, ship-owners and operators
would be reimbursed the cost of the difference between employing more expensive
British junior officers instead of less costly foreign counterparts (see chapter eight for
more discussion). Both of these options were proposed by the unions, who have
consistently called for the introduction of an ‘employment link’, and, while companies
were strongly opposed to any employment legislation, they were more receptive to the
idea of employment subsidies. If the government felt unable to introduce employment
legislation for the fear of tonnage flight, why did they not introduce employment
subsidies, which were acceptable to all stakeholders and could have been effective? The
answer to this question, as explained in chapter eight is the state’s commitment to the
EU policy framework which strictly regulates government aide to individual private
companies in order to maintain a free regional market and the resolute commitment to a
free market economy.
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Having tolerated and, in part (through relaxation of protective seafarer employment

legislation) encouraged British ship-owners to employ foreign seafarers for a long time,
it is difficult to suddenly turn round and ask them to start employing British seafarers.
The main task for the government, therefore, is how to convinc e UK-based shipping
companies to, not only train UK cadets but also, offer employment to more British
junior officers. The analysis of company recruitment policies, in chapter six shows that
the companies are not interested in British junior officers. The companies’ foremost
consideration is the cost of crewing and the data indicate that they are prepared to keep
it low by recruiting seafarers from low-wage countries irrespective of the impact on
local skills. For this reason, they will not agree to any attempt by government to
introduce employment regulations which could bind them to a mandatory employment
commitment. Instead they are prepared to relocate their operations to other less costly
and less regulated flag-regimes. The data, however, also show that, in addition to low
cost, the companies want good quality officers but, instead of looking to their traditional
‘home’ supply where quality of training and examination is assured, they would rather
establish ‘tailored’ training programmes based in low-cost labour supply countries. This
raises important questions about the power relations between nation states and capital
markets with regard to the ability of the state to introduce policies that are not
influenced by the fear of capital flight (Beck, 2005).
From the discussion on states and markets in chapter two, it seems as if the relationship
between national governments, especially in developed countries, and global corporate
capital is one of constant and continuous power struggle (Beck, 2005). It is a highly
complex relationship involving constant negotiations and reconfiguration. Seemingly, it
has evolved, over the past three decades, from one of symbiotic partnership in national
economic development, for the state, and profitable enterprise for corporate capital, to
one whereby many national governments are held ‘hostage’ by the giant multinational
corporations using the threat of capital flight. The ‘ransom’ demands include lo wer
taxes, reduced and lax economic regulations and no employment laws which might
prevent easy exploitation of labour globally.
The picture, however, is not simple, especially considering that many developed
countries have actively promoted, and still continue to promote, partnership with global
corporate capital in pursuance of the neo-liberal economic project. The case of the UK
shipping industry, its decline and the introduction of the tonnage tax, provides an
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excellent illustration. Seemingly the corporate threat of capital flight is preventing the
British government from enacting legislation which would effectively achieve policy in
relation to employment. Considering the government’s neoliberal commitment and the
strong desire to attract tonnage and rebuild the UK merchant fleet, it is easy to see why
it has actively sought to create (through the tonnage tax) an atmosphere conducive for
corporate shipping businesses rather than promote seafaring labour interests. In other
words, there are elements of state-capital ‘conspiracy’, in the design of the tonnage tax,
whereby the state deliberately avoids the discussion on employment opportunities for
British junior officers. The inclusion of the training element, supposedly designed to
increase cadet recruitment and training, seems calculated to pacify labour, as suggested
in chapter eight. Ironically, labour is also afraid of ‘tonnage flight’ and is therefore
somehow collusive in the wider capital orchestrated scheme.
Judging from the tonnage tax example, therefore, the government’s response to
globalisation and the decline in local labour is ineffective, partly because of corporate
pressure but also because of a conscious decision, on the part of the state, to work in
partnership with corporate capital rather than take any steps to regulate its activities and
protect labour. This, as Chomsky (1999) suggests, is because neoliberal governments
believe in this kind of partnership as the key to economic growth. The tonnage tax
example also illustrates the point that, in relations between labour and capital, labour
carries no decisive influence with governments. What appears to be the government’s
commitment to the neoliberal paradigm and dependence on the wealth generating
activities of capital, as the means to national economic development, means that labour
interests and any desire to protect employment markets, on the part of the state, are
secondary.
This conclusion is based on the fact that, having acknowledged that creating more
employment opportunities for UK junior officers was key to effectively encouraging
growth in the pool of officers (DETR, 1998), the government could have introduced two
possible measures into the tonnage tax to address the lack of such opportunities, as
demonstrated in chapter eight. An analysis of the process of strategy design, in chapter
five, clearly indicates that the government knew, from the outset, that the declining
number of British junior officers was directly linked with declining demand for their
services by UK-based employers and their declining attractiveness to employers
internationally, mainly because of their high prices. Furthermore, the shipping policy
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paper Charting a New Course clearly spells out the need to boost employment for
British junior officers as a way of encouraging growth in the pool of UK officers.
The overall conclusion, therefore, is that the tonnage tax, in its present shape, does not
constitute an adequate response to the negative impact of globalisation on the British
pool of seafarer labour. This is because, as demonstrated throughout the thesis, the state
seems unable to respond with effective supply-side strategies because of its
commitment to the neoliberal paradigm and the concept of free markets. At the same
time, the state’s capacity to pursue alternative response options is limited by its
commitment to the EU regulatory framework which, as demonstrated in chapter eight,
constrains the extent to which an individual state may explore and experiment with
economic policy strategies. In this era of economic globalisation, and growing corporate
influence, individual states’ capacity to design effective strategies for the protection of
labour markets is highly compromised. Whereas it is not correct to pronounce that states
have become irrelevant as economic regulators, their role has been transformed
significantly over the past forty years. The capacity to manage domestic economies and
protect them as individual localised entities has declined as a result of globalisation
which has rendered national borders highly porous and eliminated most economic and
social barriers. The study therefore indicates that, far from Beck’s argument that ‘the
state has the potential capacity to act and transform itself’ (2005:9) in this era of
globalisation, the ability and/or will to realise this potential is limited by the fact that
states have been placed in the precarious position of having to compete for favourable
consideration by global capital as the key to wealth generation and economic growth.
9.2 The Research Process: Deficiencies and Mitigation

As already indicated in the methods chapter (Chapter four), my research methods and
the research process were relatively straightforward and did not present many problems.
The limited nature of time due to the fixed nature of the funding for the project,
however, put the study under cons iderable time pressure although with proper planning
and meticulous organisation of my work schedule I was able to successfully and
productively manage the limited time. It is possible that with more time I might have
interviewed more people and expanded the scope of the research to include more
organisations and interviewee groups but the depth and quality of the data collected
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within the given space and time was excellent and sufficiently mitigated any
shortcomings arising from time pressure.
There are, however, a number of deficiencies in the research design and conduct which
might have undermined the strength of the data. However, conscious steps to address
any gaps, during the research process, ensured that the study generated valid, rich data.
One major deficiency was the failure to include cadets as one of the target interviewee
group in the original research design. As it turned out, interviews with company
managers and training staff raised issues which called for interviews with ex-cadets. An
earlier inclusion might have enabled me to contact and interview many more ex-cadets
but, nevertheless, the few that I interviewed generated rich qualitative data which
provided useful first-person accounts on cadet training experiences.
As a researcher with no prior seafaring experience, it would have been enlightening to

go on one voyage on a merchant vessel in order to experience, first-hand, life at sea.
This would have given me the opportunity to mix with, and talk to, seafarers at work
and learn about the living and working conditions at sea. However, to mitigate this
shortcoming I held discussions with many former mariners, some of who were fellow
students and colleagues and managed to a relatively good understanding of the
structures and lifestyle on-board ship. Furthermore, during the research process and data
analysis I constantly consulted with these ex-seafarers on matters, concerning living and
working at sea, on which I needed more understanding.
It would also have been useful to interview a few of the cadets who stayed on the
programme and successfully completed their training. This could have provided the
other side of the ‘drop-out’ story by exploring some of the reasons why they remained
and completed. Some of the questions would have included whether they too faced
some of the challenges described by those who left and how they overcame them. It
would have provided an opportunity to explore further the cadet-sponsor relationship.
Considering, however, that the interviews with ex-cadets were very deep and
comprehensive and the fact that I conducted many interviews with training
administrators and staff in colleges, training personnel in both shipping companies and
training agencies, the conclusions would not have been different.
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The conclusions arrived at in this chapter and chapter eight are therefore based on rich
data which was collected through a research process which, though not completely free
from deficiencies, was well designed and executed.
9.3 Future Research Agenda

Following the review of the literature and the analysis of the data in which the
conclusion points towards the inability of the state to effectively respond to
globalisation and protect local industries and labour, the study has opened new avenues
for further research. There is room here for further consideration of the role of trade
unions and their capacity to promote and protect local labour. Although the study seems
to suggest that the seafarers’ unions were not able to effectively push for an
employment element for British officers in the tonnage tax, it is important to examine
their strategy, since then, given that the tonnage tax has been found wanting in its
representation of seafarers’ interests and protection of the local labour market from
further decline. Projections by the UK Seafarers Analysis (Glen, 2006) indicate that the
number of officers in the UK will have halved over the next decade. The important
questions for further investigation include:
1. Can unions provide an answer to the decline in local seafarers labour markets?
2. What is the union strategy for doing this?
3. Can unions influence a favourable government policy response for seafaring

labour?
This investigation would involve a critical ana lysis of the declining capacity of unions
over the past three and a half decades and their ability to consolidate and rejuvenate
their capacity to influence state policy.
Another avenue for further research is the study of an EU ‘answer’ to the decline in the
seafarer pools of member-states. So far the idea of harmonised EU strategy for the
recovery of EU shipping, which was initiated in the mid 1990s and forms the basis for
the tonnage tax strategy adopted in various EU states, seems to have succeeded in
promoting recovery in the national registered fleets of some of the member states
including the UK and the Netherlands. However, this has clearly not resulted in the
recovery of local seafaring labour. Considering the finding in this thesis that the EU
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regulatory framework for state aid is one of the obstacles to effective state response to
the decline in local seafaring labour markets, the important question is whether or not
this framework can be redefined to form part of the solution rather than the obstacle.
The thesis opens up an interesting debate about labour markets with regard to general
arguments about globalisation; an area which has not been explored in the literature and
is overdue.
One area which this thesis has considered but not explored in detail is the possibility of
separating seafarer skills development from the replenishment of essential shore-side
maritime skills. From the arguments of a large number of managers participating in the
study there is an indication that many companies are beginning to think that many of the
shore-side positions do not necessarily require extensive seafaring training and
experience. There is therefore room for further research into the coordination of
industry needs and training programmes in order to investigate whether training
institutions and maritime authorities have, in any way, attempted to adjust their training
approaches to the needs of the industry in the 21st century.
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APPENDICES
Appendix One: Research Access Letter
Victor Oyaro Gekara

C/o The Seafarers’ International Research Centre
52 Park Place
Cardiff
CF10 3AT
Tel: +44 (0)29 2087 4620
Fax: +44 (0)29 2087 4619
www.sirc.cf.ac.uk
Dear Sir/Madam,
RE: REQUEST FOR ASSISTANCE
I am writing to request your kind assistance with a research project I am engaged in as

part of my PhD at the Seafarers International Research centre in Cardiff University.
The Study is on the impact of globalisation on the shipping industry, especially

seafaring labour, and the government’s response to the decline in the number of
qualified British officers.
In order to undertake the research I am carrying out a series of confidential and

anonymous interviews with ………………………………and would be very grateful if
you could spare an hour of your valuable time to help me. The kinds of things I am
interested in discussing with you include:
-
-
-
As one of (the)………………… in the UK I feel your participation is essential and
central to my research. I would therefore be very grateful if you could possibly manage
to meet with me. My data collection is scheduled for the period between January and
June of 2006. An appointment for any time during this period would be highly
appreciated.
I hope to hear from you soon and let me take this opportunity to wish you a merry
Christmas and a happy new year.
With very many thanks.
Victor Gekara
- 240 -
Appendix Two: Research Participant Information Form
Project title: Globalisation and the Transformation of Shipping Labour; a UK case

study of state response
The main objective of this project is to analyse and examine the international demand
and supply of seafarers, especially officer, and to look at how the changing patterns of
demand and supply globally have affected the pool of British merchant navy officers in
the past few decades. One of the problems facing the UK in its attempt to rebuild and
retain a significant pool of well trained, qualified and experienced officers for its
shipping industry is the high drop-out rates of cadets in the cadet training colleges.
In order to understand why this is the case I am holding a series of strictly confidential
and anonymous interviews with a few cadets who have dropped out of training in the
past few years with the purpose of exploring the reasons for their abandoning training.
Hopefully this will help inform future government and industry strategies towards
increased and sustainable recruitment and training of cadets in the UK and hence
preserve significant core British maritime skills for both the deep sea and shore side
maritime industries.
Thank you very much for agreeing to participate.

- 241 -
Appendix Three: Research Informed Consent Form
Project title: Globalisation and the Transformation of Shipping Labour; a UK case

study of state response
I………………………………………………………….. (Name)
of …………………………………………………… (Company) have agreed to

participate in this research project voluntarily and of my own accord.
I have / have not agreed to a voice recording of this interview between me and the
researcher.
The objectives and purpose of the exercise have been clearly explained to me and I have
been assured of the confidentiality and anonymity of the interviews. I therefore give
permission for any appropriate use of the information I give in any subsequent writings
and publications.
Signed ……………………………………. Dated ……………………………………..

- 242 -
Appendix Four: Ethics Committee Approval Letter

- 243 -
Appendix Five: Interview Guides
CADET TRAINING INSTITUTIONS
Training Administrators/Teachers
Key Topics:
Part One: Biographical Details
Part Two: Cadet Recruitment
Part Three: The Training Process
Part Four: The Training Programme
Part Five: Training Facilities
Part Six: Cadet Enrolment and Training Trends
Part Seven: Cadet Drop-out
Part Eight: Cadet Sponsorship Arrangements
Part Nine : The Tonnage Tax Training Obliga tion
Part Ten: Career Prospects for Graduating Junior Officers
Part Eleven: State Support
Part Twelve: Concluding Remarks

- 244 -
II
EX-CADETS
Part One: Biographical
Part Two: Motivation to Join Seafaring
Part Three: Expectations from the Training Programme
Part Four: Application. Recruitment and Admission Process
Part Five: Sponsorship Arrangement
Part Six: Views on the Training Programme in College
Part Seven: Views on the Training Programme at Sea
Part Eight: Reasons for Withdrawing from Training
Part Nine: Concluding Remarks

- 245 -
III
SHIPPING COMPANY HRMS
Part One: Personal Biographical Details
Part Two: Company Profile and Vessels Details
Part Three: Crewing for Company Vessels
Part Four: Officer Shortage in the UK
Part Five: Company Training Structures for Officers
Part Six: Cadet Recruitment and Training
Part Seven: Low Training Levels in the UK
Part Eight: Cadet Training Sponsorship Arrangements
Part Nine : Views on the Tonnage Tax and the MTO
Part Ten: State Support
Part Eleven: Views on UK Officers
Part Twelve: Future Sources of Officers
Part Thirteen: Concluding Remarks

- 246 -
IV
GOVERNMENT POLICY OFFICIALS
Part Two: Government’s Interpretation of the Decline in the Industry
Part Three: The Impact of Declining British Seafarers
Part Four: Government Response to the Decline
Part Five: Motivation for Government Response
Part Six: Impact of Government Response
Part Seven: Constraints to Government Response
Part Eight: Future Plans for British Maritime Skills

- 247 -
UNIONS
Part Two: Unions’ Interpretation of the Decline in the Industry
Part Three: The Impact of Declining British Seafarers
Part Four: Unions’ Intervention
Part Five: Constraints to Union Intervention
Part Six: Views on Government Response to the Decline
Part Seven: Impact of Government Response
Part Eight: Future Plans for the Future of British Officers

- 248 -
Appendix Six: Cadet Training Course Outlines
Deck HND Programme Structure
Phase Location Duration Phase Objective
Phase 1 6/8 weeks Introduction, safety, general ship knowledge,

At College and underpinning knowledge for N/SVQ
(Level 2).
Phase 2 24 weeks Introduction to life at sea. Practical training

At Sea and collection of performance evidence for
N/SVQ (Level 2).
Phase 3 23 weeks Review of progress, assessment for N/SVQ

At College (Level 2). HND Part 1 studies and
underpinning knowledge for N/SVQ (Level
3).
Phase 4 32 weeks Practical training and collection of

At Sea performance evidence for N/SVQ (Level 3).
Navigational bridge watchkeeping.
Phase 5 13 weeks Interim review and assessment and

At College completion of underpinning knowledge of
N/SVQ (Level 3).
Phase 6 32 weeks Completion of N/SVQ performance

At Sea evidence. Completion of bridge
watchkeeping.
Phase 7 28 weeks Final assessment of N/SVQ (Level 3),

At College completion of HND Part 2, and preparation
for MCA OOW Oral Examination.
Source:Ship Safe Training Group http://www.sstg.org/

- 249 -
Engineering HND Programme Structure
Phase 1 15/26 weeks Introduction, safety, general ship knowledge,

At College and initial underpinning knowledge for
N/SVQ (Level 3) and workshop training.
Phase 2 24 weeks Introduction to life at sea. Practical training
N/SVQ (Level 3).
Phase 3 40 weeks Review of progress, and further underpinning
At College knowledge for N/SVQ (Level 3).
Phase 4 24 weeks Practical training and completion of

At Sea performance evidence for N/SVQ (Level 3).
Engineering watchkeeping.
Phase 5 24 weeks Final assessment of N/SVQ (Level 3),
At College completion of HND Part 2, and preparation
Deck FD Programme Structure
Introduction 3 weeks Introduction to foundation degree, safety,

general ship knowledge.
At College
Phase 1 15 weeks Foundation degree studies.

At College
Phase 2 35 weeks Introduction to life at sea. Work based
At Sea learning (Operational Level). mntb deck
record book.
Phase 3 30 weeks Further Foundation Degree studies.
At College
Phase 4 47 weeks Work based learning (Management Level)
At Sea and completion of mntb deck record book.

At College evidence. Completion of bridge
watchkeeping.
- 250 -
** Phase 6 12 weeks Additional B.Sc units.

At College
**Phase 7 36 weeks Completion of self-study, usually at sea and

At College dissertation.
On completion of the FD certificate at phase five the cadet can upgrade it to a B.Sc
(Hons) by completing phases six and seven.
Engineering FD Programme Structure
Introduction 3 weeks Introduction to foundation degree, safety and

At College general ship knowledge
Phase 1 25 weeks Foundation degree studies

At College
Phase 2 24 weeks Introduction to life at sea. Work based

At Sea learning (Operational Level). MNTB
engineer training record
book.
Phase 3 30 weeks Further Foundation Degree studies.
At College
Phase 4 24 weeks Work based learning (Management Level)

At Sea and completion of mntb engineer training
record book.

At College evidence. Completion of bridge
watchkeeping
**Phase 6 12 weeks Additional B.Sc units.

At Sea
**Phase 7 36 weeks Completion of self-study, usually at sea and

At College dissertation
On completion of the FD certificate at phase five the cadet can upgrade it to a B.Sc
(Hons) by completing phases six and seven
- 251 -
Deck B.Sc (Hons) Programme Structure
Year 1 39 weeks Introduction, safety, general ship knowledge,

(Level 2) and degree studies.
Phase 1 25 weeks Foundation degree studies

At College
Summer Vacation 12 weeks Introduction to life at sea. Practical training

N/SVQ (Level 2/3).
Year 2 39 weeks Review of progress, assessment for N/SVQ

At College (Level 2) and further degree studies.
Year Out 56 weeks Practical training and completion of N/SVQ
At Sea performance evidence. Bridge watchkeeping.
Year 3 39 weeks Final assessment of N/SVQ (Level 3),

At College completion of degree studies, and preparation
for MCA OOW Oral Examination
Source: Ship Safe Training Group http://www.sstg.org/
Engineering B.Sc (Hons) Programme Structure
Year 1 39 weeks Introduction, safety, general ship knowledge,

(Level 3) and degree studies.
Summer Vacation 12 weeks Introduction to life at sea. Practical training

N/SVQ (Level 3).
Year 2 39 weeks review of progress and further degree studies

At College
Year Out 56 weeks Practical training and completion of N/SVQ
At Sea performance evidence. Engineer room
watchkeeping.
Year 3 39 weeks Final assessment of N/SVQ (Level 3),

At College completion of degree studies, and preparation
Source: Ship Safe Training Group http://www.sstg.org/

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Globalisation, State Strategies and the Shipping

The UK’s Response to Declining Seafaring Skills.

Victor Oyaro Gekara

School of Social Sciences

Signed …………………………………………………………. (Candidate)

Signed …………………………………………………………. (Candidate)

Signed …………………………………………………………. (Candidate)

Signed …………………………………………………………. (Candidate)

Victor Oyaro Gekara, 2007

ACKNOWLEDGEMENTS ........................................................................................................................................... III

TABLE OF CONTENTS ................................................................................................................................................. V

LIST OF FIGURES ...................................................................................................................................................... VIII

GLOSSARY OF ABBREVIATIONS ..........................................................................................................................IX

GLOBALISATION AND SHIPPING ......................................................................................................................- 14 -

THE UK TONNAGE TAX: A STATE SOLUTION TO INDUSTRY PROBLEMS..................................................- 43 -

3.3.3 The Design of the UK Tonnage Tax..........................................................................................................- 63 -

CHAPTER FOUR ........................................................................................................................................................- 70 -

M ETHODS AND M ETHODOLOGY ......................................................................................................................- 70 -

STATE STRATEGIES ...........................................................................................................................................- 95 -

CHAPTER SIX ...........................................................................................................................................................- 123 -

THE COMPANY APPROACH ............................................................................................................................- 123 -

CHAPTER SEVEN....................................................................................................................................................- 151 -

CADET TRAINING IN THE UK.........................................................................................................................- 151 -

7.3 Cadet Selection and Training....................................................................................................................- 161 -

CHAPTER EIGHT ....................................................................................................................................................- 192 -

A SSESSMENT ; LIMITATIONS TO THE TONNAGE TAX RESPONSE...............................................................- 192 -

CHAPTER NINE .......................................................................................................................................................- 215 -

CONCLUSIONS ..................................................................................................................................................- 215 -

BIBLIOGRAPHY ......................................................................................................................................................- 224 -

APPENDICES .............................................................................................................................................................- 239 -

A PPENDIX ONE: RESEARCH A CCESS LETTER..............................................................................................- 239 -

Figure 1: Ship registration trends; top six OR Nations and TMNs.............................. - 4 -

Figure 3: The Santos Sunset ...................................................................................... - 17 -

Figure 4: World Fleet by Ownership ......................................................................... - 18 -

Figure 5: World-Wide Supply of Seafarers by Region.............................................. - 19 -

Figure 7: Top Seven Open Registers 1948 – 2000 .................................................... - 54 -

Figure 8: UK Gross Registered Tonnage 1970 - 1999 .............................................. - 58 -

Figure 10: UK Cadet Recruitment 1970 - 1997......................................................... - 60 -

Fig. 11: The Adoption of Tonnage Tax in the EU..................................................... - 62 -

Figure 12: Summary of Company Features ............................................................... - 82 -

Fig. 13: UK Registered Tonnage 2000 - 2006 ......................................................... - 120 -

Fig. 15: Total Number of UK Officers 2000 - 2006 ................................................ - 122 -

BIFU : Banking, Insurance and Finance Union

BIMCO : Baltic and International Maritime Council

BSA : British Sociological Association

CBT : Computer Based Training

CTC : Core Training Commitment

DETR : Department of Environment, Transport and the Regions

DfT : Department of Transport

DIS : The Danish International Register of Shipping

DWT : Deadweight Tonnage

EPA : End of Period Adjustment

FDI : Foreign Direct Investment

FoC : Flag of Convenience

GCSE : General Certificate of Secondary Education

GIS : The German International Register of Shipping

GRT : Gross Registered Tonnage

HMSO : Her Majesty’s Stationery Office

HND : Higher National Diploma

HOC : House of Commons

HRM : Human Resource Manager

IMO : International Maritime Organisation

ITF : International Transport Workers Federation